What you need to know about performance appraisal methods

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Wondering what performance appraisal methods are best for your business?

With the increasing shift to remote work and businesses re-inventing themselves to suit modern needs, it’s critical to redefine your performance management strategy.

These new strategies should encourage employees to make the most of the opportunity to work from home and develop processes that help your business grow.

In this article, we’ll discuss everything you need to know about performance appraisal methods. We’ll also discuss why employee performance appraisal is so important for companies.

 This Article Contains:

(click on specific links to jump to a particular section of the page)

• What is Performance Appraisal?
• Top 3 Performance Appraisal Methods for Remote Teams 
  • Self-Evaluation Method
  • Essay Appraisal Method
  • The Critical Incident Method
• How to Build an Efficient System of Employee Performance Appraisal 
• What is the Purpose of Performance Appraisal?

Let’s dive in.

What is Performance Appraisal?

Performance appraisals are a regular process where employers evaluate an employee’s performance against a predetermined, measurable set of objectives.

Usually conducted quarterly or annually, the primary goal of performance evaluation is to determine how well an employee meets the company’s expectations.

Now there are primarily two ways to conduct the performance appraisal process — using the traditional method or the modern method. 

The traditional method emphasizes evaluating an employee for their personality traits, such as: 

• Dependability
• Creativity
• Integrity 
• Leadership potential, etc.

On the other hand, the modern performance appraisal method emphasizes the evaluation of work results (or job achievements) over the employee’s traits.

Top 3 Performance Appraisal Methods for Remote Teams

Let’s look at the top three performance appraisal methods that companies can use for the performance appraisals of remote members:

1. Self-Evaluation Method

This appraisal process allows employees to scrutinize their own performance and give themselves feedback. 

The self-appraisal method is especially useful for remote teams as you’ll be able to:

• Gain insights into the employee’s work, performance, and the way they operate.
• Know the employee’s key strengths and weaknesses. 
• Determine if your employees take their responsibilities and duties seriously.

Once a remote employee has reviewed themselves, employers can use the ranking method to rate the individual based on their strengths and weaknesses.

How do you go about this method?

You give employees a comprehensive questionnaire along with some open-ended questions about their performance.

Here are a few sample questions:

• What goals would you like to accomplish in the next few months?
• What achievements are you most proud of since the last evaluation?
• What targets were you unable to achieve this past year?
• What would you have done differently to achieve the missed targets?

2. Essay Appraisal Method

The essay appraisal method involves the remote employee’s evaluation by their superiors and other team members. 

How do you go about this method?

In this method, you ask the appraiser to:

• Give a detailed description of the employee’s performance and talk about the strengths and weaknesses of the employee’s behavior.
• Provide suitable examples to support the information given in the performance review.
• Use a rating scale (1-10) to evaluate the employee’s attributes such as work ethics, leadership, communication, interpersonal skills, etc.

Why do you need this?

With the essay appraisal method, you get a comprehensive view of how remote employees participate as team members in their work group. 

You can also determine if the employees’ behavior might cause issues at the workplace.

For instance, you can identify and prevent negative incidents like a remote employee spreading rumors among coworkers. 

3. The Critical Incident Method 

The critical incident method helps you determine how remote team members handled themselves during certain stressful situations. This way, you can learn more about their behavior at the workplace. 

How do you go about this method?

Here are the steps involved in this method of performance appraisal:

• Note down how an employee reacted to a specific situation (such as missed deadlines, etc.)
• Identify if the remote employee’s behavior was ‘good’ or ‘bad.’
• Assign a score to their performance during those incidents.

Why do you need this?

The critical incident method helps you and your HR department determine the skills, attitudes, values, and knowledge a remote employee needs to perform well during a crisis.

You can also identify which employees have the potential to be remote team managers based on their conduct.

Other Remote Employee Appraisal Methods

Some other performance appraisal methods that you can use to evaluate your remote team include:

• Human resource cost accounting method: Analyzes the employee’s performance through the monetary benefits they yield to the company. 
• Management By Objectives (MBO): Appraises managers and employees’ progress on some pre-set goals. 
• Psychological appraisal: Determines employees’ hidden potential with a psychological test and predicts their future performance.
• 360-degree feedback: Evaluates an employee using feedback collected from the employee’s circle of influence — peers, managers, and customers.
• Forced distribution method: Compare remote members against one another over any given performance standard.
• Forced choice method: The reviewer is given a few statements that apply to an employee, and they must decide if the information is true or false. 
• Field review method: A HR or administrator observes an employee for a few days and evaluates performance. 
• Journaling: An employee writes down all their achievements throughout a year and presents them to the evaluator.

How to Build an Efficient Remote Employee Performance Appraisal System 

Since working from home is the new normal, it’s essential to consider how you want to conduct performance evaluations in the future. 

With the right performance appraisal method, you can make the whole experience effective and rewarding.

Here’s how you can build an efficient employee performance appraisal system:

1. Reflect on the Purpose of Appraisal

You need to know what you want to achieve with your performance management system.  

Why?

For most organizations, the company’s pre-pandemic goals are not applicable anymore. 

The company goalposts have shifted, and the context has changed. 

In a remote environment, you can’t measure employee performance just from the volume of work they do every day.

Instead, you should look at the employees’ resilience, empathy, and adaptability in these tough times. Ideally, you should acknowledge and reward your employees for maintaining proper communication and teamwork.

2. Communicate Proactively

There are several challenges unique to telecommuting, such as,

• Reduced access to managerial support and internal communication.
• No visual cues to understand team response.
• Asynchronous communication due to different time zones, etc.

So it’s critical to have a robust telecommunication policy to overcome these challenges and ensure effective communication.

You must also use video communication tools for a performance appraisal meeting in the remote work environment.

Why?

Visual clues like facial expressions allow employees to understand the subtext of the discussion.

Here are some tips you can use to make video appraisals more effective:

• Be as explicit and verbal as possible in the discussion.
• Listen well and encourage back and forth communication. 
• Spend time to ensure that things don’t get lost in translation.
• If you need to deliver negative feedback to an employee, reassure them that you’re criticizing their performance and not their self-worth.

3. Practice Empathy

There’s no fixed template when it comes to evaluating job performance — everyone is trying to do their best in these unique circumstances.  

Ensure that you make an empathetic assessment that’s flexible and recognize the hardships that your employees may be enduring.

An empathic leadership style can bring your employees closer, increase productivity, morale, and loyalty.

So how can you have a more empathetic appraisal?

Acknowledge the fact that it’s difficult to cut out emotions and be 100% professional all the time.

Have a narrative assessment that provides an individual employee with specific information. Point out the areas they need to improve and what they’re doing well.

However, remember that even talented employees can go through a rough patch that might impact their actual performance. 

In such cases, you must:

• Ensure a positive and supportive work environment for all team members.
• Avoid too much work pressure.
• Respect the contributions of every employee and help them improve their work.

4. Eliminate Any Biases

While managers may strive to be as objective as possible in performance assessments, sometimes implicit biases inevitably creep in.   

You must become aware of biases, such as:

• Presenting employees with a good past performance record more favorably.
• Viewing average performers in a more critical light.
• Making assumptions about an employee’s attitude based on their performance.

When you recognize these biases, you can take steps to correct them. 

It’ll ensure that you avoid a situation that discourages average employees from improving their performance. On the other extreme, you’ll also avoid encouraging efficient employees into overworking themselves.

Some steps that you can take to counteract your biases can include:

• Gathering feedback from different sources.
• Measuring performance against objective performance metrics.
• Using employee self-evaluations against your perception of their work to eliminate subjectivity, etc.

5. Use Productivity Tools

In a remote work environment, you need to provide specific feedback to your employees. 

But that’s not all.

You need to conduct frequent, smaller evaluations such as monthly or quarterly check-ins.

So how can you do that?

By using performance management tools to keep a tab on the work performance of your remote team in real-time.

These tools can track and collect workday data and enable your employees and management with the information needed to make strategic improvements. 

Time Doctor is one such tool that can help you manage your employee performance and take steps to improve overall productivity and profitability.

Used by large corporations as well as small and medium businesses, TimeDoctor is a performance management software that can give you insights into your team’s effectiveness.

You can use workday data from Time Doctor to:

• See the total amount of time employees spend on projects and tasks.
• View idle and inactive time with the idle time tracker.
• Get productivity reports broken down by day, week, or months.
• Keep a tab on your employee’s most-used websites and applications.
• See if your employees are actually working with screenshots and screencasts.
• Know how they spend time on daily tasks with the daily timeline overview and more.

What is the Purpose of Performance Appraisal?

Let’s look at why employee performance appraisal is important:

1. Maximizes Employee Potential

Constant feedback on an employee’s performance will help you track their productivity.

You can then take steps to:

• Ensure tasks are assigned based on the employee’s skill and competency.
• Give more training to less efficient employees.
• Encourage employees to maximize their potential.
• Motivate an employee to work towards their career growth.
• Address any behavioral issues that may be affecting team productivity.

2. Boosts Team Management

Effective performance appraisal gives an employee a structured review process. 

This allows employees to approach the management for:

• Discussions related to performance, promotions, etc.
• Long term and short term goal setting and achieving targets.
• Clarifying expectations and growth plans for the future. 
• Identifying and resolving bottlenecks in the project execution. 

With an effective appraisal technique, you also eliminate micromanagement.

Why is this important?

When employees feel that every aspect of their work is under the scrutiny of an evaluator, it may negatively impact their morale. 

Eliminating micromanagement will enhance the trust between managers and the employees and do away with the time-consuming task of always monitoring employees. 

3. Improves Your Business’ Bottom Line

Performance appraisal system helps the management team:

• Decide the promotions, transfers, and rewards for every employee.
• Enhance decision making in situations that require layoffs or filling job roles internally.
• Optimize efficiency and employee engagement at the workplace.
• Ensure that your staff is not getting paid for hours where they were idle or inactive.

When you take such steps to maximize your team productivity, you’ll increase business output, and ultimately your profits.

Wrapping Up

Remote working may have compelled most companies to revisit how they evaluate employees. 

However, it also presents an opportunity to shift towards a more people-focused appraisal system.

Employee performance appraisal isn’t just about dealing with poor performance. It involves setting the right employee expectations and training employees to be more productive.

An employee-centric performance appraisal system allows us to work towards that goal. 

Go through the tips we have suggested in the article, and revisit your idea of what an employee performance appraisal should look like.