Advantages of grading method of performance appraisal

Each rating option communicates a different message to your employees, and each has a different outcome.

Five Levels

Advantages · Provides for the finest distinctions in performance · More consistent with bell-curve distribution · Most managers believe they can discriminate among five levels of performance · Consistent with familiar “A-F” school-grading model · Most familiar rating scheme — less training required Disadvantages · May be harder for supervisors to communicate how to attain higher performance levels · Typically only four levels are used · Middle rating usually perceived negatively — as average, or mediocre, or a “C” student · May encourage central tendency

Four Levels

Advantages · Does not include a middle rating which may be perceived as “average” · Eliminates “central tendency” rating error · May skew raters in a positive or negative direction · Provides for finer distinctions than a three-level scale Disadvantages · May not provide a way to distinguish between those who can improve and those who should be terminated · May skew raters in a positive or negative direction · Typically, only three levels are used

Three Levels

Advantages · Supervisors find it easy to categorize performance into three categories · Supervisors tend to be more consistent if given fewer choices — higher reliability · Some jobs may be better appraised on a “pass/fail” basis · Only three levels of performance can be proved empirically · Middle rating implies expected performance, not average performance · More consistent with TQM principles Disadvantages · May not provide fine enough distinctions in performance · Managers frequently alter system by adding plusses and minuses · Does not distinguish between those who can improve and those who should be terminated · Typically only two levels are used · Does not allow for identifying the truly exceptional 2-5 percent

Source: Grote Consulting Corporation

Adapted from The Performance Appraisal Question and Answer Book, Copyright 2002 by Dick Grote. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission. All rights reserved. http://www.amacombooks.org.

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Understanding how employees are performing at job tasks is necessary for a business leader to gauge business efficiency. Performance evaluations show the strengths and weaknesses of individuals and provide insights into gaps in development, training or processes among groups. Performance appraisals methods have pros and cons, so choosing the right method for your business is important.

The 360-degree performance method is a comprehensive review of task ability, professionalism and leadership traits. It not only considers the performance of tasks and the successful completion of goals but also interviews everyone who works with or under the employee along with any applicable manager reviews.

The benefit of the 360-degree method is the level of detailed information it provides when it uses data from so many sources. It gives you an idea of the leadership potential and style of an employee, the person's impact on overall team morale, and whether the employee is a professional who gets the job done.

The negative side of the 360-degree method is the time and energy it takes. Depending on how large a company or department is, this performance appraisal method could take the time of many people to conduct a 360-degree review for all employees. The time commitment is why this particular model is often reserved for reviews of potential promotion and leadership candidates.

The self-evaluation method gives employees a template to rate themselves on skills and goal achievement. It is often completed in conjunction with other evaluation methods to get a stronger idea of any gaps that exist.

The benefit of the self-evaluation method is that you get into the mind of the employee. Managers don't always see a low-performing employee as a highly aspiring employee. The self-evaluation also gives employees a chance to define their own goals in professional development, achievement and promotion. Managers can identify motivated individuals with this method. Because the employee is creating the appraisal, there is usually more engagement regarding solutions, action plans and next-step goals.

The self-evaluation method isn't without problems. Employees may not have a solid sense of self-awareness to provide quality information, which is why this method is usually not an exclusive appraisal. Some employers also find some employees are not forthright in the evaluation, creating concerns about the accuracy of the evaluation.

Rating scales are common in business performance evaluations. You have probably seen and even used this form of evaluation many times in your career. It takes all employees and rates them on a scale of excellence. The scale often ranges from one to five or one to 10, rating each defined skill on its own scale. For example, an employee might score a nine on customer service but receive a five on compliant paperwork.

The benefit of this system is it creates an even measuring tool for large groups of employees. Everyone is graded on the same topics and the same scale. This is a fast and easy method of evaluation, making it cost-effective to administer.

A significant issue with this method occurs when managers go through them so quickly they don't truly consider the employee's performance. Some reviews may be more arbitrary than others, while some may be skewed by a bias if the manager favors one employee over another.