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The Stellaris Review Part One: 5 Performance Appraisal Methods

In the coming weeks, we will be releasing additional blogs relating to review methods as a 3-part blog series on performance appraisal methods. This includes different methods, the objective of employee reviews, and an analysis of 360 reviews. This week, we will key in on five different types of reviews and the pros/cons of each.

As you know, employee reviews are important to the productivity of your business. They often determine who is doing well, who could be doing better, and what may need to change to improve overall performance. There are many different performance appraisal methods and not all of them are for you. Some are only good for small companies, others work better for large companies, while some can provide flat-out inaccurate results. Employee reviews help management make crucial decisions and if such large decisions are based on these reviews, you should make sure you're using a method that is beneficial for you and your employees.

Straight Ranking Method

The Straight Ranking method is a performance review system in which a manager or owner ranks their employees from best to worst. The highest-performing employees shoot to the top of the list, the underperforming employees drop to the bottom, and all of the employees in the middle tend to get lumped together. However, if a company has the goal of continuously improving the quality of their employees, this is a fairly quick way to eliminate the bottom-ranking employees. This is a win for the team as a whole.

Management by Objective (MOB)

This method is used to improve overall business operations by having management and employees agree on a clear set of goals. Since employees are involved in goal setting, they often become more motivated to reach that goal. This is largely due to the input and buy-in by virtue of involvement. Setting these goals can encourage workplace camaraderie and improve overall operations. If the manager is actively engaged, you will likely see awesome results from this method. However, be aware that supervisors who manage from a distance may find that their employees will cut corners to meet goals which can hurt the quality of work in the long run.

Behaviorally Anchored Rating Scale

The Behaviorally Anchored Rating Scale is one of the most objective and consistent performance review types on this list. It focuses on performance through behavioral patterns. For example, the review may be ranking from 1-5 with 1 being "rarely reaches objective" and 5 being "always reaches objective." If the scale asks if a front desk operator answers the phone after one ring using the correct introduction in a friendly manner, the manager would answer 5 if done every time, 1 if not completed as described, or perhaps even 3 if the phone is answered after one ring but doesn't use the proper introduction. While this can be a good option, it's important to know if your opinion is being swayed according to the most recent actions of your employee, whether bad or good.

Critical Incident Review

If an employee does an especially good job during an event/crisis, or if they handled a situation badly, the employer may opt for a critical incident review. This type of review requests more information from involved parties and can be used to help create job descriptions or specifications. Though this method is cost-effective, it can be skewed due to lapses in memory and tends to be more subjective. Additionally, this review method doesn't reflect on the everyday performance or behaviors of an employee, but rather provides information that can later be used for coaching and training.

360 Reviews

One way to gather information about an employee's strengths and weaknesses is by conducting 360 interviews. These interviews gather information from managers, direct reports, and co-workers, and can provide insight into how that employee functions when not under the watchful eye of the owner or manager. Though 360 reviews seem effective at first glance, they have proven to have many downfalls and thus are not recommended for employers that are seeking the most accurate information. Part three of this series will cover the shortcomings of 360 reviews in further detail.

Your Next Steps

After reading through this list, you now have a better idea of what reviews work for which kind of companies, but have you made a final decision on which review process you want to use? If not, our team would be happy to help you make your decision.

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The Stellaris Review Part Two: Performance Reviews...
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