The How and Who of the Performance Appraisal Process

In this continuation of exploring the performance appraisal process, I’m drilling down into the how and who that need to be taken into account.


When it comes to the how of performance appraisal, there are six major categories of methods commonly used. Which one or ones you go with will depend on the specific, unique context of your own organization. The descriptions of each will include the context in which it best serves its intended purpose. You also have the option to mix and match multiple methods to meet your company’s performance appraisal needs.

Critical Incidents. In this method, a manager keeps a detailed ongoing record of performance notes, both positive and negative, for the duration of the period that will be appraised. The nice thing about this method is that it keeps the performance appraisal process on the radar screen of the manager at all times. If performance management is something you only think about once or twice each year when it’s time to do the formal review, it’s hard to remember all the pertinent information needed for the process to be fair and effective. What’s probably going to stand out in this scenario are the biggest blunders the employee made, which is already weighting the entire process towards the negative end of the spectrum, which I’ve already explained is problematic in terms of the necessary motivation aspect of the effort. By keeping this ongoing record of performance notes, you’ll also have the opportunity to provide initial feedback and coaching along the way, when it’s freshest and needed most. The notes can be kept either in a hard-copy or electronic format, whatever is easiest for you. But it’s important to remember to make sure that your notes include both the positive and negative aspects of an employee’s performance.

Management by Objectives (MBO). This method involves a manager and employee sitting down to collaboratively determine a mutually agreed upon set of objectives that the employee is meant to achieve, such that progress can measured periodically with results obtained linked to rewards received. In its most effective form, like critical incidents, it includes the opportunity for ongoing feedback to take place throughout the period under review, usually during a set meeting schedule. Because of this, it is a great method for helping develop employees. When they meet or exceed the objectives, they should be rewarded, whether through promotions, pay raises, bonuses or other forms of recognition for a job well done.

Narrative Approach. Managers utilizing this method take the time to write a written report about the employee’s performance during the period under review. Rather than just ticking boxes, the manager has the opportunity to put some depth into the performance review. To be as effective as possible, it should also include a section where the manager lays out a developmental plan for how the employee can improve. It is rarely the sole form of evaluation and is commonly used in conjunction with other methods.

Rating Scale. This is what most people think of when they complain about the performance appraisal being a “check-the-box” exercise. Each aspect of performance is typically rated on a scale, typically ranging from 3 points to 5 points, with lower numbers indicating lower performance and higher numbers indicating higher performance. The dangers here involve subjectivity for individual scores, meaning how one manager defines “excellent” may not be the same view among other managers. That’s why it’s best to use this method in combination with another method that allows for more depth in describing the employee’s performance so that everyone is clear about why the performance was appraised as it was.

Behavioral Scales. This method is similar to the rating scales mentioned above because each aspect of performance is rated along a continuum. What is different, however, is that each point on the scale comes with a description of performance for that score, which takes a lot of the subjectivity out of the rating process. It takes a good deal of time and effort to come up with these scales and descriptions for each kind of job, which is why they are less popular than other rating scales.

Ranking. This method is increasingly falling out of favor, wherein employees in a given department are ranked by performance from best to worse. While it helps managers identify who is eligible for various kinds of employee decisions from compensation to promotions to terminations, it also often comes with directives for how many workers can be placed into each rank, which inevitably forces winners and losers.

Finally, the who of the performance appraisal must also be determined. Who should be the one to evaluate a given employee’s performance? It seems a no-brainer that it should obviously be the employee’s immediate supervisor, right? And yet it may not make sense, such as if the supervisor doesn’t actually interact directly with the employee all that much. And what if the supervisor lacks the skills or competencies to do a good job? There may be situations where performance appraisals are best conducted by peers, although this can be problematic for all the same reasons, with the additional concern of potentially making oneself look good by making others look bad. There’s also the option for self-assessment, although it too can be riddled with potential problems, the primary one of which is people being to soft on themselves. Other options include subordinates or even customers if appropriate. The choice of who is often made easier by engaging in a 360˚ appraisal process where multiple perspectives are taken into account.

As you can see, getting the performance appraisal process right is no easy task. That’s why many organizations continue to limp along with a system that is either less than optimal or downright broken. Fixing a broken system takes real time, effort and resources, but the upside of making that investment is huge in terms of your organization achieving success.

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