Choosing the Best Appraisal Method: Absolute, Relative, or Objective? What Works for You?

Hi everyone!

While reading an article on 360-degree feedback, I came across the following paragraph:

"Three different approaches exist for appraisals. Employees can be appraised against absolute standards, relative standards, and objectives. In cases where absolute standards are used, the employees are not compared with any other person. In the second category of appraisal methods using relative standards, individuals are compared with other individuals. The third approach makes use of objectives. Employees are evaluated based on how well they accomplish a specific set of objectives that have been determined to be critical for the successful completion of the job."

Can people working in organizations please tell me which of these approaches is better and why?

Thanks,
Kanika

It seems the terms “absolute standards” and “relative standards” refer to systems in which employee behaviors are evaluated. “Absolute” and ‘relative” are not the terms usually used for describing behavioral evaluations, as “absolute” is in itself relative to the appraiser's frame of reference.

“Relative standard” seems to refer to the forced ranking system used by some companies to get rid of the bottom 10 percent of employees each year. This system can lead to demotivation and lack of innovation, although there are reports that it works well for a small cross-section of companies. One advantage of this system, its proponents argue, is that it avoids clustering of ratings around the middle.

We find that what works best is a combination of agreed and measurable “objectives” and evaluation of “behaviors”. This combined system has the advantage that employees get a clear idea of the results required and have a stake in them, whilst paying some attention to values and behaviors that employees need to live by in the organization. I can't go into here a full discussion of the pros and cons of each approach, although I will end with the caveat that what system is best for an organization will depend on a range of business and cultural variables.

Vicki Heath

Human Resources Software and Resources

http://www.businessperform.com

Hey friend This is what i know about PA :)

PERFORMANCE APPRAISAL:

A performance appraisal is a process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employees, for purposes of administration including placement, selection for promotions, providing financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally.

Several methods and techniques of appraisal are available for measuring the performance of an employee. Some of the traditional methods are

„Ï Straight Ranking Method

„Ï Man-to-man Comparison Methods

„Ï Grading

„Ï Graphic Rating Scales

„Ï Check Lists

Following are some of the modern methods:

„Ï Assessment Centers

„Ï Appraisal by Results or Management by Objectives

„Ï Human Asset Accounting Method

We will briefly discuss one of the modern methods of appraisal

Assessment centers:

The most important feature of assessment center is job-related simulations. These simulations involve characteristics that managers feel are important to the job success. The evaluators observe and evaluate participants as they perform activities.

Under this method, many evaluators join together to judge employee performance in several situations with the use of variety of criteria. It is used mostly to help select employees for the first level (lowest) supervisory positions. Assessments are made to determine employee potential for purposes of promotion. The assessment is generally done with the help of a couple of employees and involves a paper-and-pencil test, interviews and situational exercises.

Hope This will Help You

All th Best :D

Methods of Evaluation of Performance Appraisal

Numerous methods have been devised to measure the quantity and quality of employee's job performance. Each of the methods discuss could be effective for some purposes for some organization as different organizations different methods. Broadly all the approaches can be classified into past oriented and future oriented.

PAST ORIENTED

Rating Scales

This is the simplest and most popular method of appraising employee performance. The typical rating-scale system consists of several numeric scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude and the like. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, then computes the employee's total numerical score. The number of points scored may be linked to salary increases, whereby so many points equal a rise of some percentage.

Rating scales offer the advantages of adaptability, relatively easy use and low cost. Nearly every type of job can be evaluated with the rating scale, the only requirement being that the job performance criteria should be changed. This way a large number of employees can be rated in a short time, and the rater does not need any training to use the scale.

The disadvantages of this method are several. The raters biases are likely to influence the evaluation, and the biases are particularly pronounced on subjective criteria such as co-operation, attitude and initiative. Furthermore, numerical scoring gives an illusion of precision that is really unfounded

Man to Man comparison method:

This technique was used by the US army, during the first world war. By this method certain factors are selected for the design by the rater for each factor. A scale of man is also created for each selected factor. Each man to be rated is compared with the man in the scale, and certain scores for each factor are awarded to him. So, instead of comparing a “whole man” to a “whole man” personnel are compared to the key man in respect of one factor at a time. This method s used in job evaluation and is called the factor comparison method. In performance appraisal it is not of much use because the designing of scales is a complicated task.

360-degree system of appraisal

Where appraisal are made by peers, superiors, subordinates and clients it is called 360-degree system of appraisal. First developed at GE, US in 1992, the system has become popular in our country too. GB (India), Reliance Industries, Crompton Greaves, Godrej soaps, Infosys, Thermax and Thomas Cook are using the method with greater benefits. The Arthur Anderson survey (1997) reveal the20% of the organizations use the 360-degree method. Here, besides assessing performance, other attributes of the assesse- talents, behavioural quirks, values, ethical standards, tempers and loyalty are evaluated by people who are best placed to do it.

Peer appraisal

Peers are in a better position to evaluate certain facts of job performance which the subordinates or supervisors cannot do. Such facts include contribution to work group projects, interpersonal effectiveness, communication skills, reliability and initiative. Closeness of the working relationship and the amount of personal contacts place peers in a better position to make accurate assessments. Unfortunately, friendship or animosity may result in distortion of evaluation. Further, when reward allocation is based on peer evaluation, serious conflicts among co-workers may develop. Finally, all the peers may join together to rate each other high.

FUTURE ORIENTED

MBO

The Management by objectives concept which was conceived by Peter Drucker, reflects a management philosophy which values and utilizes employee contributions.

MBO wroks can be described in four steps:

1) The organization, superiors and subordinates together or just the superiors alone establish the goals of the employee. This goal usually the desired outcome to be achieved and it can be used to evaluate performance.

2) Second step involves involves setting the performance standard for the subordinates in a previously arranged time period. As subordinates perform, they know fairly well what there is to do, what has been done, and what remains to be done.

3) Then the actual level of goal attained is compared to the goals agreed upon. The evaluator figures out why the goals were not met and accordingly determines training needs.

4) The last step is establishing new goals and, possibly, new strategies for goals not previously attained. If the goals were succeeded the subordinate may have larger involvement in setting of his next goal otherwise the superior may have to do it alone.

However, this method has been criticised for not being applicable to jobs with little or no flexibility, such as assembly-line work. It works well with managerial personnel and employees who have a fairly wide range of flexibility and self control in their jobs. And if this method is linked to employee rewards, the they are more likely to take up less challenging goals so that they are more likely to achieve them. Also if the rewards are semi annual or annual, then the employees may take up short term goals and neglect the important long term goals. L&T follows MBO style of evaluation

Hi Vicky,

Thank you. That was useful. It gave all the pros and cons of the two systems. But could you possibly tell me, supposing I had to use it in an organization, how would I determine which one would be good for them? Would it be similar kinds of sectors having the same system, or would it depend on the turnover? Or would there be some different criteria? I'd be thankful if you could help me.

Thank you,
Kanika

Kanika, there is no strong correlation between type of performance management system and industry sector or turnover. I suspect there is more of a correlation the size of the organization, wiht larger organizations going for a more formal approach.

Also, there are many things to consider other than just whether to go for “objectives” or “relative” or “absolute” standards. To begin with, you need to be clear on why your organization wants to set up a formal performance management system. I would first sit down with the executive team to discuss and decide:

-What is the purpose of the performance management system?

-How will you know that you have achieved your purpose?

-Will the system appraise goals and objectives, behaviors, or both?

-How will you appraise performance: manager appraisal, multi-rater feedback, objective measures or manager staffing reviews, or a combination?

-How will you reward good performance/exceptional performance?

-How will you fund rewards?

-How will you handle disagreements between appraiser and employee?

-Will the appraisal cycle be based on the business cycle or employee anniversary date?

To answer these questions, you and your executive team will need to consider:

-your current management capability

-size of workforce

-types of jobs

-geographical disparity of workforce

-IT systems capability

-current business measurement systems

-organizational culture, including levels of trust and openness

-current rewards and remuneration system

-current organizational strategy and goals

-current performance management system

-budget availability

-level of executive support

As you can see, what performance management system is right for your organization depends on a number of factors. There is no single right answer and whatever system you choose to design and implement should be a system that you are comfortable with and that has the support of the executive team and employees.

You can find out more about performance management systems at http://www.businessperform.com/html/...anagement.html

Vicki Heath

Human Resources Software and Resources

http://www.businessperform.com