0333 444 0165 info@citrushr.com
6 types of appraisal system – and which one is best for small businesses
  1. Blog
  2. Employee Performance
  3. 6 types of appraisal system – and which one is best for small businesses

Performance appraisals are a way of keeping track of employee’s progress. Done well they should indicate strengths and areas for development and be a means to formulate goals and motivate your team. They are an opportunity to praise jobs done well or good behaviours that you’d like to reinforce and see more of, as much as an opportunity for constructive criticism.

Traditional annual appraisals can be a source of stress to employees if they feel that they will be criticised and their behaviour pulled apart, so it’s important to build a culture that makes regularly giving and receiving feedback a normal and familiar part of your company every day. Dropping a few thank yous here and there will also go a long way towards alleviating any stress associated with formal appraisals, as your team will know that you see both sides of the coin, rather than being hell-bent on pinpointing the negatives.

There are several different types of appraisal you can adopt and they serve different purposes. Whilst it’s important to measure progress towards tangible goals, e.g. sales targets, it’s also smart to help employees build self-awareness and try and  measure their own strengths. You can then make sure you’re working with each team member to maximise what they can bring to the team and the business. For example: someone may not be fairing very well in a customer facing role, despite thinking they’re quite good at that job, if you can discover where their character would fit better you can adapt the work they do to play to their strengths, or alternatively, provide some further training to boost their abilities.


Types of appraisals

Straight ranking or the paired comparison method

This compares all employees to each other, ranking them from best to worst. Whilst it may be easy to see who’s a high flier and who’s not making the cut, everyone in the middle will be harder to rank. This method falls short by overlooking strengths that may not be immediately obvious. For this appraisal to be reliable it must follow a systematic method of comparative evaluation or it runs the risk of being subjective and unfair. It also assumes that everyone is the same, and in reality a business needs a mix of different people and characters to succeed.

Grading and checklist

Both of these appraisal systems require an outlined list of objectives required for any specific role. It’s a systematic method that allows a manager to quickly see an employee’s level for any given skill e.g. teamwork, communication, attention to detail etc. They could be scored A – F or 1 – 5 or even from unacceptable through to excellent. This method is also subjective and so could be seen as unreliable if used alone.

Management by objective

If you don’t know where you’re going how will you know when you’ve arrived? The thinking behind this modern method is based around both employee and manager jointly setting goals to be achieved within a specific time period. It’s thought that when an employee is involved in the goal setting process it’s more likely they’ll achieve their goals. This form of appraisal is a process rather than a one-off evaluation and it’s all about planning and being proactive rather than reactive to events and circumstances. It’s considered a fair way to appraise because it avoids subjective bias, it’s not costly to do and it encourages self-awareness which should in turn improve an employee’s ability to contribute well to the team.

Trait or behaviour based appraisals

Trait based appraisals are highly subjective and tend to reward behaviours such as creativity, flexibility and levels of extroversion and confidence. There will always be employees who contribute greatly but whose innate characteristics are not as easily quantifiable or obvious, this method is likely to overlook them. Measuring traits also presents a problem when it comes to setting goals for improved performance.

On the other hand, behaviour based appraisals tend to be more objective and fair if the standards for appraisal are well thought-out to begin with. It’s useful for assessing performance on quantitative tasks and for deciding on who to reward or promote, but can be time consuming and costly to ascertain the right behavioural standards to appraise on in the first place.

Behaviourally Anchored Rating Scale

This is a half-way house between behaviour and trait-based appraisals, aiming to combine and benefit from both. It’s particularly useful for employees who need to perform both detailed tasks with accuracy but also need to possess certain traits such as empathy and caring.

360-degree appraisals

More than 85% of all the Fortune 500 companies use the 360 degree feedback process as a cornerstone of their overall leadership development process. Whilst your small business may not seem to be at the stage of needing a “leadership development programme” as such, the ideas that underpin this type of appraisal offer benefits to a team of any size.

The method involves feedback from several people who have contact with each employee, keeping biases firmly at bay. This could be several other colleagues, clients, customers etc and even the employee themselves is required to offer their view of their role in the team. This method is hailed as the best approach because it’s all encompassing (the secret’s in the name!) and can give such a well-rounded view of an employee. Not only does it give a manager a precise understanding of an employee’s attitude and behaviour, it can also really benefit the individual by helping with self-improvement (in turn giving them confidence, which will help your business no end).

For more info on 360-degree appraisals, click here >>

Or HR software allows you to manage appraisals by using a series of default questions, or customising your own. Click here for a free trial >>

HR software

You can easily set and change appraisal frequency and reminders meaning you’ll never miss one!

Hr software

Click here for a free trial of our HR software.


Get content like this every month

Join thousands of other businesses and get helpful, practical advice on tricky HR issues delivered straight to your inbox.