Modern Methods in performance appraisals

 

In contrast to the Traditional methods of performance appraisals, Modern performance appraisal methods have been developed to mitigate the shortcomings such as bias and subjectivity (Aggarwal and Thakur, 2013).

 

Modern Methods

• Management By Objectives (MBO)

The “Management By Objectives” method was introduced by Peter Drucker in 1954. According to Drucker’s concept, ‘objectives setting’ and ‘progress monitoring’ are the main 2 factors those should be followed throughout the company from the CEO to the labor (Kyriakopoulos, 2012).

Extended model for MBO, namely SAMBO was introduced by Heinz Weihrich in 2000 with 7 elements.

1.      Strategic Planning and hierarchy of objectives

2.      Setting objectives

3.      Planning for actions

4.      Implementation of MBO

5.      Control and Appraisal

6.      Subsystems ( Manpower, compensation and others)

7.      Organizational and management development

(Lunenburg, 2012). 

                            Figure 1: Seven Elements in SAMBO method (Weihrich, 2000)

 

MBO method is easy to implement & measure because the objectives are well defined. Further the performance is monitored, and necessary guidance will be provided to achieve the objectives (Aggarwal and Thakur, 2013).

• Behaviorally Anchored Rating Scale (BARS)

The BARS method was introduced by Smith and Kendall as a combination of critical incident and graphic rating scale methods to overcome the reliability and validity issues in the performance ratings. In this method the raters are observers not the judgers. The scale is more informative and descriptive than just a number scale (Aggarwal and Thakur, 2013). According to Lunenburg (2012) below is a sample BAR scale for an industrial psychologist.

 

Traditional Graphic Rating Scale	Ranking level	Modern Behaviorally Anchored Rating Scale
Outstanding Performance	5	This industrial psychologist is recognized as an expert and can be expected to help others and to provide counsel to others working on the team.
Commendable Performance	4	This industrial psychologist can be expected to know almost everything about testing and can provide assistance in solving difficult problems
Acceptable Performance	3	This industrial psychologist can be expected to work diligently on normal caseload and to complete them on time.
Needs Improvement	2	This industrial psychologist can be expected to work late on testing to keep up with the caseload.
Unacceptable Performance	1	This industrial psychologist is confused and can be expected to hinder the completion of the caseload because of lack of knowledge.

 

Table 1: Traditional Graphic Scale vs Modern BAR scale for an industrial psychologist (Lunenburg, 2012)

• Human Resource Accounting

According to Flamholtz, Bullen and Hua (2002), HRA has passed five stages over 5 decades.

i.                    1960-1966: Introduction of basic HRA concepts

ii.                  1967-1970: Basic academic research developing measurement models

iii.                1971-1977: Rapid growth of interest in HRA

iv.                1978-1980: Period of declining interest in academia and corporation

v.                  From 1981: Renewed international interest in HRA theory and practice

In this appraisal method, cost of investment and the return on investment for the Human Resources is considered. However, there is no clear way of finding the cost and value of human resources (Aggarwal and Thakur, 2013).

• Assessment Centers

Employees will be evaluated for few days in an assessment center with simulation of sample works, interviews with clients, oral presentations, written communication exercises etc. This method helps to easily identify the strengths and weaknesses of each employee, but method is costly and difficult to manage (Aggarwal and Thakur, 2013).

• 360-degree

Most of the appraisal methods are dependent on a single rater. 360-degree appraisal method is a multi-rated technique which relies on the feedback of the manager, subordinates, colleagues, customers, suppliers or even the spouse. The 360-degree method is more objective, accurate and reliable compared to other methods (Aggarwal and Thakur, 2013).

 

•  720-degree

720-degree appraisal method is conducting the 360 degree appraisal method twice. After the 360-degree appraisal is completed, the manager has to provide feedback to the subordinate for the second time (Aggarwal and Thakur, 2013).

 

                                Figure 2: 720 Degree Review Model ( Source: Patil & Dalvi, 2019)

 

    720-degree appraisal method is the latest performance appraisal technique which is introduced in new economy corporations. As indicated in the Figure 2 above, the manager will have a performance review again with the subordinate just after the 360-degree evaluation, based on the performance, objectives and goals (Patil & Dalvi, 2019)

 

    As per Patil & Dalvi (2019), most of the Indian companies do not conduct the 360-degree or 720-degree appraisal methods due to the fear of being criticized the superiors by the subordinates. But actual feedback of all the stakeholders is the best path to identify the strengths and weaknesses of all the employees of an organization from the CEO to worker.

 

    In Sri Lanka also the most companies are delaying the execution of modern appraisal techniques, might be due to the same reason which was described by Patil & Dalvi (2019). Execution of modern performance appraisal methods will provide enhanced feedback from multiple internal and external sources those will lead the employee excellence, customer satisfaction and indirectly the organizational growth.

 

 

 

            References

•  Aggarwal, A. and Thakur, G.S.M., 2013. Techniques of performance appraisal-a review. International Journal of Engineering and Advanced Technology (IJEAT), 2(3), pp.617-621.

•    Flamholtz, E.G., Bullen, M.L. and Hua, W., 2002. Human resource accounting: a historical perspective and future implications. Management decision.

• Kyriakopoulos, G., 2012. Half a century of management by objectives (MBO): A review. African Journal of Business Management, 5(6), pp.1772-1786.

• Lunenburg, F.C., 2012. Performance appraisal: Methods and rating errors. International journal of scholarly academic intellectual diversity, 14(1), pp.1-9.

•  Patil, A.M. and Dalvi, C.S., 2019. 720 Degree Performance Appraisal Systems. International Journal of Trend in Scientific Research and Development (IJTSRD), ISSN, pp.2456-6470.

• Weihrich, H., 2000. A new approach to MBO: Updating a time-honored technique. Management World. [online] yumpu.com. Available at: https://www.yumpu.com/en/document/read/5714943/a-new-approach-to-mbo.

        [Access on 16^th of August 2022]