Traditional and Modern Methods of Performance Appraisal | Pros and Cons

Among all the tasks that the HR department of an organization does, performance appraisals are one of the most important ones. It’s not only important, but it’s tricky as well. 

You have to deal with many factors to conclude performance appraisals, and overlooking or misinterpreting can make the results unfair. Moreover, the biases of most performance appraisal methods make it even harder. 

That’s why, over the years, there have been multiple methods of performance appraisals to help the HR department do this work with the most accuracy. However, nowadays, these methods are categorized into two categories: traditional methods and modern methods of performance appraisals. 

While traditional methods of performance appraisals have been there for a long time, modern methods are also taking their place. However, any method you take comes with its pros and cons. 

Traditional Methods of Performance Appraisals

1) Annual or Bi-annual Reviews

Among all the traditional methods of performance appraisals, it is one of the most common ones that has, to date, been used by many organizations. 

The way it works is very simple. The performance evaluation of the employees is done in a meeting with their managers. To evaluate the performance of the employees, a time frame is decided, for example, 6 months or one year. 

So, everything that has been noticed must be in and under the decided time frame. Based on the meeting, the managers decide whether or not to give an employee a performance appraisal.

Pros

• It helps managers understand the potential of the employee in the long term. 
• A structured evaluation format eliminates the chance of bias.   

Cons

• The evaluation may lead to wrong results since it is mostly done for a longer time frame. For example, if an employee has shown growth in the last month only, an assessment of six months may overlook the improvements of last month. 

2) Rating Scale

Rating scales are often used to simplify any review assessment. This method turns the review assessment into a quantitative format. This method uses a scale from 1-5 or 10. This higher rating on the scale reflects better performance, whereas the lower ratings represent poor performance. 

Pros

• This traditional performance evaluation method allows easy comparison of one employee to others. 

Cons 

• Since the format doesn’t assess the reason behind the rating given to any employee, it’s easier to be biased in this method. 
• It does not allow the employer to do the performance evaluation in detail. 

3) Goals Oriented Evaluation

In Goals Oriented Evaluation, the assessment is given earlier than the evaluation. In simple terms, the manager puts goals in front of the employees, which they need to complete within a fixed period. In sales-oriented job roles, it’s a very common way used for performance appraisals. 

Pros

• This methodology makes it easier to rank employees. The employee who over-perform their targets is given out on top, while those who underperform are ranked lower.
• It promotes competition among the employees to complete and over-perform their targets to get appraisal and promotions. 
• This method also promotes accountability as the employee knows that completing the target is due to his/her underperformance. 

Cons 

• It may fail for job roles where setting goals may not be possible. 
• The employer or manager needs to keep an eye on the employees as even when the goals are shared with the employees, the individual deadlines are yet to be met. 

Modern Methods of Performance Appraisals

1) 360° Feedback

In the pool of modern methods of performance appraisals, 360° Feedback is one of the most prominent ones. It is a very extensive performance evaluation method, including taking feedback and ratings from multiple sources. 

Firstly, the feedback is carried out by those who deal with the employee directly, such as the manager and HR. They provide their ratings and feedback about employees’ performance, behavior, and other aspects. Moreover, the feedback is also taken from those who have received the service from that employee. 

So, if the employee has worked well and provided his/her work on time, he/she will get a good rating from the manager. Similarly, if the client likes the work, he will praise the employee. Moreover, in addition to these parties, the employee’s rating and feedback are also collected about him/herself. 

Pros

• It’s a comprehensive method of evaluation. That’s why it takes a lot of factors into account, providing a complete view of the employee. 
• Since the framework of this methodology has feedback at its core, it helps the employee to know the spaces for improvements. 

Cons 

• It is a time-consuming evaluation method as input is required from multiple sources. 
• Office politics may influence the results due to managers’ biases. However, including multiple sources helps point out bias. For example, if the manager has rated the employee as poor but the client has rated the exact opposite, then it points out that a bias may be present. 

2) Behavioural Anchored Rating Scales (BARS)

The advanced version of the traditional rating scale method, BARS, assesses employees’ performance by giving them multiple ratings. As its name suggests, this method involves anchoring various employee behaviors related to the job. The employees are rated on these behaviors or factors, which results in the numerical analysis of the employees. However, since multiple behaviors are observed, it is more comprehensive than the traditional rating scale. 

Pros

• Firstly, BARS is one of the methods that almost eliminates bias involvement in the evaluation process. 
• Moreover, the overall process of BARS remains Transparent. Hence, employees know what to do and what not to do.

Cons

• While it’s among the best methods for performance appraisals, it consumes a lot of time. 
• It also requires adequate training to ensure the correct implementation of it and accurate results. 

Conclusion

These are the five methods of performance appraisals, including both traditional and modern. While all these methods have their advantages and limitations, you can choose the best one considering your needs. 

Moreover, you can also make performance appraisals easier for your HR department by installing HRMS software in your organization. A good HR management tool always has a performance appraisal feature that analyzes the performance of employees with the most accuracy and no biases.