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6 Effective Types of Performance Appraisal Management Systems

Performance reviews can be a daunting process for any employee, meaning it has to be done in a professional manner with care and consideration. Knowing which type of performance appraisal system to use with certain employees can ensure you maintain harmonious relationships and enhance their future performance, which will benefit your business greatly in the future. In order to ensure you get the best out of your employees while also pinpointing areas of improvement, you need to use the right performance appraisal method. But, since there are so many options available, here are 6 types of performance management systems that really get the job done!

1. Straight Ranking Method

This is possibly the most direct way to conduct a performance review as it literally ranks employees from best to worst. While some businesses see it as an effective performance evaluation system that will separate the top performers from those at the bottom, it is not everyone’s cup of tea as it is easy to ruffle a few feathers with this type of approach. That being said, this performance appraisal method may encourage those at the bottom and in the middle to work harder in order to be recognised and praised the next time round. Simply put, you have to assess whether this performance appraisal system is the right fit for your business.

2. Grading System

Many managers might see this as an effective performance appraisal system as they can grade employees on different skills that are important to their particular position in the company. Some common examples include teamwork, punctuality, attention to detail, willingness to help others, and overall communication with colleagues ranging from interns and juniors to upper management. The most common way to grade employees is either report card style, whereby it’s A-F, or through the numbers 1-5, with five usually being the best. Via this performance appraisal method, managers can identify the strengths and weaknesses of their employees, meaning they can laud them for certain traits and advise them to work harder on elements they have the ability to do better in. Be wary that some employees may feel that they are being unfairly judged, but if you give them the right kind of encouragement, you will see a boost in their performance and attitude going forward.

3. 360-degree Feedback

The 360-degree performance appraisal method is widely considered to be one of the best systems being used in the workplace. This is because it is not only managers that provide feedback, but fellow employees as well. In some cases, employees assess the managers’ performances and some even self-evaluate, whereby they honestly review their skills and pinpoint which areas they are excelling in and what they need to improve on. With the feedback being continuous, it is a great way to applaud employees for all their hard work or give them a gentle nudge in the direction they need to be heading. Interestingly, more than 85% of all the Fortune 500 companies have embraced this appraisal review method, which goes to show it is an effective performance evaluation system that has been tried and tested, and will, more than likely, produce the results you are looking for.

4. Self Appraisals

Getting negative feedback from managers can be a bitter pill to swallow for many employees as they feel the higher-ups in the company are being harsh and criticising them on areas where their strengths actually lie. This is why some companies have adopted a self-appraisal performance review system as it allows employees to rate themselves honestly. It gives them the opportunity to think long and hard about what traits of theirs are beneficial to the company and what aspects of their job they need to work harder on. Sometimes, letting individuals reflect on themselves is the best way to get the brutal, honest truth!

5. Management by Objectives

Many companies consider this an effective performance appraisal system as managers and employees sit together and set a few objectives that the employee must accomplish in a certain period of time. What makes this type of performance management system so popular is the fact that it’s cost-effective and allows both parties to have an input, meaning it is a collaboration rather than the higher-ups simply telling employees what to do.

6. Annual Reviews

Considered the old-school method and one that has brought success to many companies for years, some managers don’t want to deviate from this performance appraisal system that has been standard practice. What makes annual reviews an effective performance evaluation system is the fact that employees know what to expect and will generally be motivated to work harder to ensure they get glowing praise from their managers.

Which Performance Appraisal System is best for You?

Employee appraisal reviews go way beyond these 6 types of performance management systems, meaning there are so many to choose from. Whether you select one particular model that you deem effective or adopt a combination of different ones, ensure that you have your employees’ best interests in mind as they are the backbone of any thriving business. If you are an employer in need of HR services, such as payroll outsourcing, work visas and MPF administration, Fastlane HR is your go-to destination. Contact us today and together, we’ll take your business to the next level!