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Types of Employee-Performance Rating Systems

Several performance appraisal systems exist, from classic to cutting-edge. Some of these employee-evaluation systems work better than others, and there is some overlap among the various systems. The most successful systems are tailored to the companies in which they’re used. No matter what performance appraisal approach your company uses, there's one element that can make any of them work better, and that element is you.

Writing essays

As the name implies, this approach consists of little more than a manager’s written overall opinion of each employee’s performance. Today’s essays should be short, focused, and performance-related, and they should be provided along with your rating or ranking of your employees. At the heart of these mini-essays are the specific, targeted, job-related phrases that are among the most powerful tools for performance appraisal and improvement.

Using graphic rating scales

Graphic rating scales are among the most common tools in the performance appraisal process. They typically contain a list of the following, which employees demonstrate on the job:

  • Traits and characteristics

  • Competencies

  • Actions and behaviors

  • Results

The forms usually include a numerical scale, often from 1 to 5, indicating whether the employee is outstanding, excellent, competent, marginal, or unsatisfactory in each described area. Some of these forms also include a section where you can write comments and phrases to further describe the employee’s performance.

Choosing checklists

Another basic evaluation method relies on checklists, the most common of which is a broad listing of work-related behaviors, characteristics, and outcomes. With this list in hand, you place a checkmark indicating “yes” or “no” next to any of the descriptors that apply to the employee who is being evaluated.

A variation on this method is the weighted checklist. This approach uses the same process, but the descriptors in the checklist are given different values based on their role and importance in the somewhere in between a definite “yes” or “no” response.

Forcing the choice

Ranking employees

Referred to as multi-person comparison methods, these appraisal strategies match each employee’s performance with that of her peers and then generates a rank order from top to bottom.

In some cases, comparing employees can be based on any number of criteria conjured up by the managers themselves. In fact, it can be as basic as asking managers to rank their employees from the best to the worst. In other cases, the ranking process and strategy can be more focused, structured, and sophisticated.

Multi-person comparisons work best when you have large departments or groupings of employees in the same evaluation unit.

Finding critical incidents

Critical incidents are a special category of employee behaviors that focus on two distinct areas: particularly outstanding behaviors and particularly questionable behaviors. The critical incidents method of performance appraisal is based on managers spending time during the year observing and gathering behavioral data on their employees, while looking extra carefully for those critical incidents.

Using rating scales tied to behavior

Instead of relying on behaviors that can be appraised in any position in a company, one well-known appraisal method takes the process into a different arena and bases evaluations on specific behaviors required for each individual position in an individual company. This approach is known
as behaviorally anchored rating scales (BARS).

Development of BARS evaluations requires an in-depth understanding of each position’s key tasks, along with an understanding of the full range of behaviors displayed by individuals in carrying out such tasks. You rate these behaviors for each employee; then you anchor each behavior to points on a rating scale, which indicates whether the behavior is exceptional, excellent, fully competent, or unsatisfactory. The result is a rating scale for each task.

Managing by objectives

MBO begins with managers at the top of the company setting goals. Then managers and employees at each successively lower level develop their own goals. Employees’ goals are designed to support the goals of their own managers. In this way, the entire organization is linked together in the pursuit of objectives.

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