The Dubai and in fact the entire UAE is a very competitive and vibrant market which demands businesses to perform well to defeat competition and sustain a long term growth. The performance appraisal and performance management is a standard practice for large businesses in the country. However, now a day’s even local businesses and SMEs are also implementing performance management frameworks to boost their productivity, profitability and to sustain growth. The employee performance appraisal system provides a structured mechanism to deal with obstacles, resolve problems, improve employee engagement, boost their morale, monitor progress, and above all align all the resources to achieve the high-level business goals and objectives. Whether you are a local or small business, a medium size enterprise or a large-scale business the biggest challenge is to select a suitable performance appraisal method. This blog will help you understand the modern methods of performance appraisal.
What is Performance Appraisal?
Basically the employee performance appraisal is a process of evaluating employee performance against clear and quantifiable goals and objectives that are aligned with high-level organizational goals and objectives.Traditionally the appraisal are done on annual bases. However, more and more businesses are adopting continuous monitoring and more frequent appraisals. Actually the problem with traditional employee performance appraisal method is that it is done annually, and in some cases twice a year. Whatever the case is, the traditional appraisal methods doesn’t support the modern fast-paced and ever changing market and business needs. The traditional performance appraisal methods lacks adequate communication and they also don’t support the managers in process of making timely course corrections and taking steps to deal with problems or in taking preventive measures during the appraisal period. By the time when the manager become aware of a problem, it is already too late, the damage have already been done. Hence, more and more businesses are now leaving traditional employee performance appraisal methods and are more inclined towards modern appraisal practices.
8 Modern Methods of Performance Appraisal
In Dubai and all around the UAE the competition is very high and the customers are too demanding, which pushed businesses to take drastic measures in order to boost their performance and by improving employee management processes and performance appraisals. That is why selecting an appropriate employee performance appraisal method has become a challenging task for the businesses and the HR. In this blog we will cover top 8 most effective and modern employee performance appraisal methods to provide our audience a brief understanding of each method which will help them selecting the best performance management system as per their needs.
Modern Performance Appraisal Methods: 1. Management by Objectives (MBO)
The simplest definition of Management by Objectives (MBO) is that the high-level organizational goals are defined and determined first then according to those goals and objectives, employee and managers mutually identify/define, communicate, plan and manage employee goals and objectives for success. This enables each individual to see their progress and accomplishment in connection with high-level organizational goals and objectives. It gives employee a clear understanding of what is to be expected from them in order to achieve their individual goals and what is their contribution in the high-level business goals and objectives. This helps each individual employee understand the top priorities of the business and let them align with the high-level goals and objectives while carrying out their daily tasks. Aligning the employee and all resources with the high-level organizational goals while providing them with a clear understanding of the organizational and their individual goals can drastically boost performance and increase the quality and quantity of the outcome.
Modern Performance Appraisal Methods: 2. Psychological Appraisal
All traditional employee performance appraisal methods only evaluate the past performance of the employees, even the most modern methods only consider at most the ongoing performance however, the psychological appraisal method is a very unique evaluation process, it help businesses and managers understand and evaluate the future performance and potential of an employee. The psychological appraisal method focuses on the intellectual and personal traits of an employee which can either improve or deteriorate their performance in future. The psychological appraisal methods is designed to meet the modern needs of the workforce, as now a day’s employees are more vulnerable due to balancing their work and personal life, which could result in frustration and poor performance at both work and also it can impact their personal life. That is why the psychological appraisals are conducted by qualified psychologists who held several personal sessions, in-depth discussions and interviews and perform various psychological tests to understand the true potential of an employee and the result/feedback is used to project their future performance expectancies.
Modern Performance Appraisal Methods: 3. 360 Degree Feedback
The 360 Degree Feedback is simply feedback and performance data which is systematically gathered from the all relevant connections of the employee such managers, peers, team leads, cross function managers, and even customers or any other external source too. That is why it is called 360 Degree feedback. Naturally every employee likes the communication and continuous feedback, this help them understand their performance better and encourage them to make improvements. Since the 360 degree feedback collects feedback data from all internal and external raters who interacts with the employee, so it provides a variety of different aspects and prospective of employee performance. It increase transparency of the appraisal process and keep employee motivated. That is the reason the 360 degree feedback is one of the most widely used appraisal method. This method can effectively highlight the strengths and weaknesses of the employees and help them make improvements in right direction. Furthermore the 360 degree feedback is a great tool for the businesses and managers, it help them forming high-performance teams to achieve critical strategic goals and to work on important projects.
Modern Performance Appraisal Methods: 4. Critical Incident Method
The critical incident method is a very useful employee performance appraisal tool it evaluate and provide analysis of the employee performance when a critical incident happens, the employee’s manager provide the details of the incident or gather information about the incident and the employee is evaluated to understand if he/she performed very well, or very bad or the incident where he/she could have performed better. Basically the critical incident method is used to analyze the KSAO – knowledge, skills, abilities and other indicators/attributes required to perform their task. The critical incident method is widely used by the businesses to analyze if the employee meets the required KPIs (key performance indicators) associated with his/her job role. Businesses wants to understand if the employee is performing his/her job role as per requirements or if the management intervention is necessary who can enroll the employee for a training, held consoling sessions, compensate them for their achievements or terminate them for very poor performance. Essentially a business wants to know if it is getting what it is paying for or not.
Modern Performance Appraisal Methods: 5. Assessment Center Method
The assessment center appraisal method analyze employee’s abilities, competencies, skills and personal characteristics by asking them to participate in in-basket exercise, simulations, test groups, and role playing exercise where employees are put in various roles with various responsibilities and asked to do the tasks or to solve real-life problems. Basically the assessment center appraisal methods are used for in-depth analysis of employee’s emotional behavior, response, problem solving skills, ability to deal with pressure, adoptability, collaboration, judgment, etc. and several other traits. There could be several tests and simulations to reach to a conclusive result. Usually the assessment center method is applied when a business wants to hire a new candidate or if a candidate is up for promotion, etc. however, since past few years it has become a popular appraisal method. The assessment center appraisal method is done under a trainer who evaluate the employee and he/she also discuss their performance with the other raters.
Where it provide a great tool to boost the morale of the high-performers and motivate the average-performers the assessment center method could also have negative impact on the low-performing employees. Hence it should be done by professional trainers only.
Modern Performance Appraisal Methods: 6. 720 Degree Method
Basically the 720 degree method is a modern and more evolved form of the 360 degree method. The 720 degree appraisal method consists of two rounds of 360 degree appraisal over a pre-determined time period. The employee evaluation is done by two groups, internal stakeholders and external group who interacts with employee such as customers, suppliers, investors, etc. This is what made 720 degree appraisal method the most crucial for the employees and for the business as well. The main objective of the 720 degree appraisal method is to meet the expectations of the employer, employee and the customers too. In the first round the aim is to build an effective employee development program or individual development program. Then after a certain period of the time the employee’s performance is analyzed again to understand how their performance is improved and how potential they have for future. The results of the second round also help evaluating the effectiveness of the employee development program and help organizations make improvements for future.
When employees notice improvements after the development program they got motivated and business can gain their trust which help to improve performance in the long term and also reduce employee turnover.
Modern Performance Appraisal Methods: 7. Behaviorally Anchored Rating Scale (BARS)
The behaviorally anchored rating scale or also known as BARS is one of the best employee performance appraisal method. It help businesses to leverage the both quantitative and qualitative performance data during the appraisal process. The behaviorally anchored rating scale (BARS) enables the rater to measure the performance of an employee against pre-defined behavioral responses anchored to a quantifiable rating scale or numeric value. This method can accurately measure the quality of the work as well as the quantity. Poor quality with more quantity and good quality with less quantity are both not good, in fact an employee performance should be balanced between the quality and quantity. The behaviorally anchored rating scale (BARS) is a numeric scale from 5 to 9 where 5 means poor and 9 mean good performance. The manager who conduct BARS analysis must write down all the tasks that an employee is expected to perform, then they should define the appropriate behavior that goes along with those tasks. All these behaviors can be assigned a numeric value which can be used to determine the employee behavior hence the business can get a highly accurate data. Which helps improving employee performance and allow businesses to form high-performing teams.
Modern Performance Appraisal Methods: 8. HR Cost Accounting Method
The HR (human resource) accounting method consider employees as an asset and it measures the cost a business had incurred to recruit, hire, train and develop the employee. The HR cost accounting method also determines the financial impact of the employee performance and their economic value to the business. In simple words the HR cost accounting appraisal method determines the value of the cost of retaining an employee and the revenue it is generating for the business. It improve various human resource processes and help businesses understand the cost of the human assets. This is done to ensure the employees are delivering the value as per the expectations form their job role. It not only help determining the cost and returns of the human assets but it also help businesses in evaluating the output of the human resource, training programs, and other relevant facilities. The HR accounting appraisal method enables businesses to measure the employee performance against the monetary benefit or value generated by their service.
Why Performance Appraisal is Important?
Before we discuss different performance appraisal methods it is important to understand what are main objectives of deploying an employee performance appraisal method? Here are some key objectives a business can achieve by implementing an effective employee performance appraisal system:
- Sustain Growth and Increase Profitability
- Improve Performance and Operational Efficiency
- Increase and Facilitate Communication between Managers and Employees
- Define and Communicate High-level Business Goals and Individual Goals Clearly
- Align all Resources and Individual Goals with the High-level Business Goals and Objectives
- Increase Employee Engagement, Improve their Morale and Reduce Turnover
- Collect Real-time Employee Performance Data
- Design Effective Employee Development and Training Programs
- Implement and Improve Employee Competency Building Process
- Improve HR Processes and also Evaluate HR Programs
- Improve Employee Feedback, Compensations, Rewards, Recognitions and Accountability
- Achieve Short-term and Long-term High-level Business Goals and Objectives with Higher Success
- Optimize Cost, Effectively Utilize Resources, Increase Output and Gain a Competitive Edge
An employee performance appraisal system enable businesses to make improvement in each and every function. It just not improve employee performance but it also improve the entire internal culture of the organization and help improving brand identity by providing good quality work and satisfactory services to the customer. Businesses can gradually achieve their performance goals and develop a very reliable and efficient workforce which can help them even in a very competitive market such as in Dubai, UAE.
Conclusion
The employee performance management is essential for businesses and organizations who are seeking a sustainable long term growth. When it comes to employee appraisal methods, all methods can be classified in two groups, the traditional employee performance appraisal methods and the modern employee performance appraisal methods. In this blog we have covered only the best and modern employee performance appraisal methods because the traditional appraisal methods are getting less effective over the time, their accuracy is not enough for the modern needs and the processes mostly involve manual steps too which reduce the accuracy and increase chances of errors, mistakes and even bias. These modern performance appraisal methods are designed to meet the modern needs and provide highly accurate evaluation. RSI Concepts is a leading performance management system provider in Dubai, UAE. If you want to learn more about the subject or if you want to enquire about our employee performance appraisal solution please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.
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