7 Performance Evaluation Methods for a More Capable Workforce
Performance evaluations. They're not just meetings; they're milestones. Opportunities to reflect, recalibrate, and realign.
But let's be honest: the traditional one-size-fits-all annual approach? It's like using a hammer when you need a scalpel – too crude and not nearly precise enough.
In fact, many companies are moving away from this outdated tactic in favor of more proactive methods for measuring employee performance. The goal? A more capable, motivated, and aligned workforce.
This article will:
- Cover seven different employee performance evaluation methods.
- Discuss the pros and cons of each method.
- Lay out eight factors to consider when making a decision.
Our goal is to help you discover the best performance evaluation methods for your organization, empowering your HR and management teams to maximize the potential of their workforce.
📅 Traditional annual reviews
We have all been part of a traditional annual review at one point or another. You sit down with a supervisor at a pre-scheduled time, usually in a conference room, and receive feedback about your performance over the past year.
These meetings are often tied to your annual raise. They can also feel stressful and one-sided.
Many modern companies are evolving past this method for more frequent, less formal alternatives. Traditional annual reviews are the baseline for performance evaluation, requiring minimal time and effort from management and employees.
Traditional annual reviews are still a standard employee appraisal method today because they are simple for management, and many companies feel there is no need for change. The benefits of the traditional performance review method are:
- It ensures time efficiency (usually less than one hour per employee annually).
- It coincides with annual raises (making it easier to link compensation to performance appraisals).
- Yearly reports are easy to track and manage.
- There is the risk of a lack of motivation and direction for employees year-round.
- It is often one-sided (top-down feedback only).
- Yearly reviews tied to raises can be stressful.
Most of the positive aspects of yearly reviews are a double-edged sword. The fact that they require minimal time from employees and management means employees and management are communicating very little. This can lead to miscommunication, confusion, and an "us versus them" mentality. None of which bode well for performance development.
➡️ Take a look at our annual performance review template and learn when it is a good option.
🔁 360 Degree reviews
360-degree feedback is an evaluation strategy where performance feedback is crowdsourced from multiple reviewers, a key being peer reviews. This method ensures more performance insights without that burden falling exclusively on the shoulders of people operations.
While this still does require considerably more man-hours than annual reviews, those hours are dispersed among the entire company. Not only that but by involving everyone in the review process (rather than one group always on the receiving end), employees often feel it is fairer and accept accountability for the results.
➡️ Dive deeper into our comparison of 360-feedback vs traditional performance appraisals.
⚠️ But you should know that 360 performance reviews are generally too cumbersome for manual methods.
Software like Zavvy provides an efficient means for every member of an organization to give and receive performance-based feedback. Finding ways to automate employee feedback processes will save untold time for people operations.
- Feedback comes from multiple sources and perspectives.
- Downward and upward feedback provide a more complete picture.
- Reviewees are also reviewers, promoting fairness and accountability.
- The work is evenly distributed (not just for people operations).
- There is no need for disruptive meetings.
Employees can receive more feedback with less effort, especially with 360-degree review software. Considering feedback sharing is a task for multiple reviewers rather than a single person, this can be a much more efficient and less intrusive way to evaluate job performance, especially at larger companies.
- These reviews can be subject to interpersonal bias.
- They can be highly inefficient without software.
- They require a considerable time investment from employees.
- Reviewers can be inconsistent.
With software like Zavvy, it is possible to conduct 360-feedback anonymously. This sometimes allows for more honest feedback, though some companies prefer public reviews to limit bias.
➡️ Get inspired with over a hundred 360-degree feedback questions.
Often, as a part of, or in addition to, other methods, employee self-evaluation can provide helpful information for human resources.
It is easy to get caught up in upward, downward, and 360-degree feedback, losing sight of this unique angle.
Unlike other "external methods," self-assessment provides a crucial baseline against which other evaluations can be compared.
For example, suppose an employee believes they are performing well in a certain area, but other feedback points to the contrary. In that case, there may be a miscommunication in expectations.
Or suppose an employee acknowledges their struggle in a particular area, which is supported by other evidence. In that case, it is easier to approach the topic from a supportive standpoint. Here is why you shouldn't ignore self-assessment:
- Provides unique insights into individual performance
- Can compare perceived proficiency with actual performance
- Encourages employee self-reflection
- Limited in scope when used alone
- Often influenced by personal bias
- May lack big-picture perspectives
➡️ Check out our guide to self-evaluation questions and employee self-evaluation template.
🌟 Behaviorally anchored rating scale (BARS)
One of the trickiest parts of performance evaluation is acquiring accurate, objective data. Traditional employee reviews often rely heavily on a single perspective, such as a manager's opinion. This approach leaves too much room for subjectivity and error.
Behaviorally anchored rating scales (BARS) attempt to create more objective ratings, especially concerning the scale itself. This is done by specific scenarios corresponding to the rating values as a reference point.
Here is an example:
5 - The writer's work often contains errors, including grammar and false information.
6 - The writer's work often includes a few errors, such as spelling or factual inconsistencies.
7 - The writer's work is error-free, except for occasional typos.
8 - The writer's work rarely has errors, requiring minimal editing.
9 - The writer's work is consistently perfect; no editing is needed.
Rather than evaluating an employee's performance on an ambiguous scale like an A-F grading system, BARS establishes benchmarks based on real-world examples.
This approach requires more thoughtful consideration from the reviewers and avoids inconsistencies in rating values (i.e., tough graders).
Here's how BARS can help with competency-based performance appraisals:
- It reduces bias.
- It provides clear examples of specific levels of performance.
- It is less subjective.
- It is role-specific.
- It ensures consistency among evaluators.
- Creating scenarios takes time.
- It relies heavily on observed behavior.
- Different tests are needed for each role.
➡️ Read more about the value of competency-based performance management.
🎯 Management by objectives (MBO)
Management by objectives is a simple but effective strategy for setting and evaluating performance metrics. Instead of relying on downward feedback and ambiguous rating scales, MBO is a collaborative process with simple pass-or-fail evaluation.
Here's an example for a marketing writer:
- The writer generally completes work on or before the deadline: yes or no.
- The writer's work generally requires little to no editing: yes or no.
- The writer is open to criticism and implements feedback effectively: yes or no.
- The writer can match the style and tone of the brand: yes or no.
- The writer collaborates well with other members of the creative team: yes or no.
In this simplified example, there is no need for any numerical ratings or grading scale. The evaluator decides whether the subject meets the criteria with a simple yes or no. A gradient system could be used by adding an option for "sometimes" or a more common five-point scale ranging from strongly agree to strongly disagree, but this is rarely needed.
➡️ Learn top strategies for setting goals for employees with or without MBO.
Additionally, effective MBO includes the subject in the objective-setting process to ensure clear expectations.
For example, the second prompt above may have originally read, "The writer's work requires no editing." However, the writer may have found that too idealistic, knowing that occasional mistakes happen and edits often lead to a more robust finished product. By compromising on a more realistic objective, the subject has more accountability and won't find the result unfair.
Here are the pros and cons you should be aware of when considering MBO as an evaluation method:
- It involves employees in goal-setting.
- It reduces feedback bias.
- It is less subjective.
- It sets clear expectations.
- It can lack nuance.
- Intangible aspects are more challenging to measure.
- It requires a goal-setting phase for each employee.
➡️ Explore how employee performance reviews at Google use a similar method known as OKRs.
🧑🤝🧑 Team evaluations
One of the most significant risks of 1:1 feedback is the risk of lowering employee morale. Negative evaluations run the risk of actually harming employee performance rather than improving it. Team evaluations are a method that avoids singling out individuals who may take criticism too hard.
By evaluating teams' performance instead of individuals, you can also expedite the process.
Evaluating each individual is no small feat for a company of 1000 employees. However, if those 1000 employees form 50 teams, evaluations become more manageable.
A workforce can be broken up into many different units, such as departments, teams, or even projects. The important thing is that the evaluation is meaningful to everyone in the group. Smaller groups are usually better, though larger groups can be effectively evaluated if they all work closely together.
Here are the advantages and disadvantages if you choose to focus on measuring team performance.
- Fewer reviews save time.
- It encourages collaboration.
- No one feels singled out.
- It promotes team building.
- Individual performance isn't managed.
- It diluted accountability and ownership.
- It can cause friction among team members.
💬 Performance check-ins
A popular trend for modern companies is to ditch the annual employee review in exchange for more informal, continuous support from people operations. Performance check-ins allow for bite-sized feedback at a high frequency, resulting in more consistent and actionable feedback.
Instead of waiting an entire year to look at performance data, performance check-ins can be administered as needed.
Common triggers for a performance check-in are at the end of a project, when an issue arises, or when the opportunity presents itself.
More frequent evaluations mean this method can be more informal and flexible to avoid inconvenience.
Other benefits of the performance check-in method are:
- Continuous feedback supports constant growth.
- Encouraging the sharing of targeted input as needed.
- It is less formal and stressful.
- It is less disruptive for admins and participants.
- It promotes communication.
- It requires more oversight.
- It requires a continuous obligation for people operations.
- It is less systematic and measurable.
➡️ Learn more about the power of continuous feedback vs performance reviews and see how Adobe and Cisco adopted performance check-ins to great effect.
➡️ Find inspiration in our performance review templates covering various evaluation methods.
🔍 What factors should you consider when selecting a performance evaluation method for your company?
Every company is unique, so choosing a performance evaluation method takes careful consideration. There is no best choice for every situation.
Here are the factors you should consider when selecting the best strategy for your situation.
It is hard to overstate your company culture's impact on performance evaluation's effectiveness.
Start-ups with a casual atmosphere tend to have much more flexibility and lower risk regarding employee performance ratings than large companies operating by the book.
360-degree feedback is a much better option for organizations that value collaboration and teamwork than companies that promote competitiveness among peers.
Consider how much involvement your employees will want in the performance appraisal process, such as providing feedback to coworkers, self-assessing, or goal setting. Also, consider what type of rating scale you think is appropriate. These considerations may suggest which tactics are most beneficial or risky to institute.
➡️ Explore different performance rating scale examples to find the perfect fit.
The size of your company and commensurate human resource department can be determining factors for your performance appraisal method. Large companies with hundreds of employees need more efficient solutions than small companies with only a handful of employees.
For example, creating BARS for a large company with various roles would require significant time. Without a sizable HR department, this method becomes impractical. Software-driven 360 feedback is often a more feasible solution in these cases.
While higher frequency performance evaluations usually lead to better results, this isn't always necessary or possible. One of the reasons so many companies still use traditional annual reviews is simply because they don't have the capacity to conduct more frequent evaluations.
An annual review is about the minimum (short of no reviews at all), while regular performance check-ins and 360-degree feedback can occur on a very frequent basis. Other standard time frames are quarterly, monthly, or even weekly.
Often preferred from a management point of view is to evaluate performance at milestone moments, such as the end of a project. This provides a central topic to focus on and timely feedback.
In any case, determining an ideal frequency for performance evaluation can either be a factor you plan around or the result of which method you wish to implement.
If you are able to perform frequent assessments, this is recommended. However, for smaller companies especially, this isn't always possible or even worthwhile.
Integration with HR systems
Companies already using HR software or related systems are better equipped for certain types of performance evaluation. For example, a company with a remote workforce may have an easy time implementing performance check-ins online, but 360-degree feedback and team evaluations may not be as impactful.
Leveraging the HR framework you already have can make the transition easier and avoid reinventing the wheel. For example, if you already conduct 1:1 Zoom meetings for performance reviews, adding a self-assessment beforehand can provide valuable new information for the evaluator.
Adopting methods that don't mesh well with your current HR systems will add undue challenges.
➡️ Explore top performance management and feedback tools for HR pros.
Relevance to job roles
A significant differentiator for performance appraisals is the role of the subject. Measuring the performance of salespeople is significantly different than measuring the performance of graphic designers.
For salespeople, periodic performance check-ins based on objective numbers are sensible. For creatives, check-ins and team evaluations at the project end are often more beneficial.
In other cases, frequent evaluation is simply not needed or advantageous. Instead, less involved methods like a yearly review save time and resources while being sufficient to evaluate performance. This is common in tiny businesses or operations with little room for improvement.
The ideal employee performance evaluation method for any situation is not always obvious. While one strategy may make the most sense to you, someone else may have a different opinion based on their experience or leadership skills.
At the end of the day, choosing a method that stakeholders and upper management agree on will make the adoption and transition smoother. You want methods of performance evaluation that instill confidence at every level of your organization.
Ease of use and adoption
Retooling your human resources operation to accept a new style of performance evaluation is a tall order. In some cases, abruptly making a drastic change could be met with a lot of pushback.
Choosing a method similar to your current process can make the switch much easier. You can frame it as an upgrade rather than a big change and ease into the new approach more gradually.
For example, transitioning to quarterly MBO planning and evaluation from yearly employee reviews will probably be more accessible than flipping the process on its head by adopting weekly 360-degree feedback and team evaluations. Give preference to the path of least resistance.
You want your process to be straightforward for managers and employees to understand. Clear expectations will have a greater impact on an employee's future performance.
For some companies, especially larger operations, objectivity can be a big deal. Selecting a method that allows for minimal bias will provide more consistent, fair evaluations across the board.
360 reviews, self-assessment, and BARS try to be fairer and more well-rounded, though MBO is usually the most objective.
➡️ Create your ideal performance evaluation set-up with Zavvy
Creating or changing how your company handles employee evaluation is no easy feat. It requires a significant amount of planning and will likely be met with some level of resistance.
However, a strong performance evaluation strategy can greatly impact talent management and employee motivation. The ripple effect of such an endeavor will be felt far into the future.
The good news is you don't have to tackle this challenge alone! Zavvy's performance review software has everything you need to set up a seamless performance review system, no matter your chosen method. The Zavvy platform gives you options including:
- competency-based reviews
- with or without ratings
- upward, downward, or 360-degree feedback
- public or anonymous
- 1:1 meetings/check-ins
- MBO- and BARS-friendly tools
- team evaluation capability
Our platform isn't a one-size-fits-all tool but an entire toolbox with everything you need to do the job right. Our 360 feedback software is highly customizable to meet your company's needs. We also offer goal management software perfect for MBO or other styles of employee performance management.
📅 To learn more about how Zavvy can help you revolutionize performance evaluation in your company, contact us for a free demo of these time-saving tools and more.
What are the most effective performance evaluation methods?
Different types of performance evaluation work better for different situations. Some company cultures are better suited for specific employee evaluation methods; even individual employees will respond better or worse to different review styles.
That said, most companies are moving away from traditional methods for more timely and well-rounded alternatives, such as:
- 360-degree feedback (including self-assessment)
- Performance check-ins
- Team evaluations
Many of these methods can also be used in conjunction for more diverse results. Just be careful that your assessment center method doesn't become too unwieldy.
What are 3 types of employee performance appraisal?
Three types of employee performance appraisal are annual reviews, 360-degree feedback, and performance check-ins. These methods can be differentiated by frequency, formality, and who is providing feedback.