Vishal is recruited by a 100-year-old media organization to head their HR team. One of the things Vishal notices is that the HR team uses out of date methods of performance appraisal. These appraisals don’t add any value to the organization’s objectives. Upon speaking to employees, Vishal discovers that even they don’t find the appraisals particularly useful.

Drawing on his MBA learnings, Vishal reforms the appraisal methods of his organization, introducing interesting and innovative processes that form the core of modern methods or techniques of performance appraisal. Within a year, the impact is evident. The new approach to performance appraisal results in happier employees, more consistent performance and a far more productive HR unit that functions according to a specific blueprint.

  1. What Is Performance Appraisal?

  2. Objectives Of A Performance Appraisal

  3. Modern Techniques Of A Performance Appraisal

  4. Appraisals As An Art

What Is Performance Appraisal?

Performance appraisal may be defined as an annual or half-yearly process that’s used to assess and quantify performance of employees at an organization. This is usually done by setting goals and objectives for employees to meet and evaluating their performance in light of those goals and objectives.

Modern methods of a performance appraisal involve thorough mechanisms or processes that supply transparent results on employee performance. There are several modern techniques of a performance appraisal and each of them is designed to cater to key components of performance in an organization.

Research has found that when modern performance appraisal methods are used, 68% of employees who receive accurate feedback feel fulfilled in their jobs.

Objectives Of A Performance Appraisal

Modern methods of a performance appraisal can help meet the following objectives:

  • Provide evidence for promotions and pay hikes

  • Provide detailed information on employee training and development

  • Facilitate compensation reviews and competency building

  • Offer a comprehensive evaluation of HR programs

  • Offer holistic feedback and address employee grievances

Modern Techniques Of A Performance Appraisal

Modern appraisal methods are conventionally classified into seven types. These seven modern methods of performance appraisals are explained as follows:

  1. Management By Objectives (MBO)

This is one of the modern appraisal methods that was coined by management guru Peter Drucker in his book, The Practice of Management, published in 1954. As one of the most important modern methods of a performance appraisal, MBO focuses on designing organizational objectives that are agreed upon by both employers and employees. The objectives must take into account past performance as well as future ambitions.

  1. Behaviorally Anchored Rating Scale (BARS)

Modern methods of performance appraisals are getting more innovative by the day and a good example of that is BARS. Through this method, which combines both qualitative and quantitative data, an employee’s individual performance is compared against specific standards of behavior, for which information is obtained using Critical Incident Techniques (CITs).

  1. 360 Degree Feedback

One of the most widely used modern appraisal methods, 360 degree feedback takes a diverse approach to performance reviews by collecting feedback on an employee’s performance from peers, employers, supervisors and even customers. This minimizes the chances of bias in feedback and allows the appraisal to be as impartial and comprehensive as possible.

  1. Psychological Appraisal

Arguably the most holistic of all the modern techniques of a performance appraisal, a psychological appraisal considers an employee’s emotional, intellectual and professional needs to estimate their potential for performance in the future. Many modern methods of performance appraisals are overly quantitative and forget the human elements involved in working for an organization. Among modern methods of a performance appraisal, psychological appraisals address this gap by creating the right psychological environment for employees to thrive.

  1. Assessment Center Method

This is the most data-oriented and technologically dependent method among all the modern techniques of a performance appraisal. Here, a trainer observes employee behavior even as employees participate in a range of assessment activities, from role-playing scenarios to computer simulations to debates and in-basket exercises. Overall, the assessment center method evaluates an employee’s sensitivity, confidence, communication skills and administrative foresight.

  1. 720 Degree Method

Modern methods of a performance appraisal in HRM are usually limited to the organization involved, but the 720 Degree Method stands apart as one that goes beyond the stakeholders within a company to organizations outside it. In order to gather broader feedback, this method factors in external groups like customers, suppliers, investors and other financial institutions in assessing an employee’s performance.

  1. Cost Accounting Method

Among the most straightforward modern methods of a performance appraisal is the cost accounting method, which calculates the costs involved in retaining an employee within an organization against their economic output. This means translating employee performance into an organizational balance sheet of profit and loss. The cost accounting method is among the most popular modern methods of a performance appraisal in HRM.

Through these modern methods of a performance appraisal, it’s possible to appreciate the value of a performance appraisal in ensuring transparency, efficiency and progress at an organization. These modern methods not only pinpoint the flaws and loopholes at an organization, but also provide constructive suggestions on how to fix issues relating to structure and personnel.

Appraisals As An Art

Just like refining one’s artistic skills, appraisals take time, expertise and a certain X factor that sets one apart. At Harappa, the First Time Manager Program includes features that make conducting appraisals smooth, substantial and extremely rewarding. Using frameworks such as the Skill-Will Matrix, Dual Concern model and Leadership Equation, your managers will learn how to zoom out and see the big picture, give constructive feedback and invest in team members’ growth. Enroll your employees for this program, which helps learners develop a range of 15 must-have Thrive Skills and watch them grow into well-rounded managers!


Explore Harappa Diaries to learn more about topics such as Performace Appraisal, the Objectives Of Performance Appraisals360-Degree Performance Appraisals & the Traditional Methods Of Performance Appraisal that will help organizations tap into their employee’s potential.

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