Evaluate what you want - because what gets measured, gets produced. ~ James A. Belasco

Employee performance evaluation methods are defined as the techniques used to judge a particular employee's work performance in order to give him or her the benefits of the job. There are many things which depend on these methods like an employee's appraisal, performance review, and career development.

An employee is analyzed by recording his successes, failures, strengths and weaknesses, and then deciding his worth for the organization. The productivity of employees for the work assigned to them is also observed in the time they are given to prove themselves.

There are three main aspects which are considered while evaluating an employee. They are quality and quantity of work done, time in which it is done and the value it adds for the company.

Common Evaluation Methods
The prime objectives of performance review for employees are to give them feedback for their work, record their work in order to give them organizational rewards and to provide further development opportunities for their careers. These methods of employee performance evaluation help them improve their performance through coaching and training sessions provided by the management of the organization. No matter which field it is, there are a few common assessment techniques used by the management to improve work execution of the employees. Good communication and recreation are also some of the biggest assets of an organization to boost the performance of employees and increase business revenue. Here are some commonly used performance evaluation techniques.

Management by Objectives (MBO) Method

This is one of the best methods for the judgment of an employee's performance, where the managers and employees set a particular objective for employees and evaluate their performance periodically. After the goal is achieved, the employees are also rewarded according to the results. This performance appraisal method of management by objectives depends on accomplishing the goal rather than how it is accomplished.

Critical Incident Method

In this method, the manager writes down the positive and negative behavioral performance of the employees. This is done throughout the performance period and the final report is submitted as the assessment of the employees. This method helps employees in managing their performance and improves the quality of their work.

Behaviorally Anchored Rating Scales (BARS) Method

The BARS method is used to describe a rating of the employee's performance which focuses on the specific behavior as indicators of effective and ineffective performance. This method is usually a combination of two other methods namely, the rating scale and critical incident technique of employee evaluation.

Behavioral Observation Scales (BOS) Method

It is defined as the frequency rating of critical incidents which the employee has performed over a specific duration in the organization. It was developed because methods like graphic rating scales and behaviorally anchored rating scales (BARS) depend on vague judgments made by the supervisors about employees.

360 Degree Performance Appraisal Method

The definition of this performance evaluation method is that, it is a system or process wherein the employees receive some performance feedback examples, which are anonymous and confidential from co-workers. This process is conducted by managers and subordinates who, through 360 degrees, measure certain factors about the employees. These are behavior and competence, skills such as listening, planning and goal-setting, teamwork, character, and leadership effectiveness.

Checklist and Weighted Checklist Method

The checklist method comprises a list of set objectives and statements about the employee's behavior. For example, leadership skills, on-time delivery, innovation, etc. If the appraiser believes that the employee possesses the trait mentioned in the checklist, he puts a tick in front of it. If he thinks the employee doesn't have a particular trait he will leave it blank and mentions about it in the improvement column. Weighted checklist is a variation of the checklist method where a value is allotted to each question. The value of each question can differ based on its importance. The total score from the checklist is taken into consideration for evaluating the employee's performance. It poses a strong threat of bias on the appraiser's end. Though this method is highly time-consuming and complex, it is widely used for performance evaluation.

Graphic Rating Scale Method

Graphic rating scale is one of the most frequently used performance evaluation methods. A simple printed form enlists the traits of the employees required for completing the task efficiently. They are then rated based on the degree to which an employee represents a particular trait that affects the quantity and quality of work. A rating scale is adopted and implemented for judging each trait of the employee. The merit of using this method is that it is easy to calculate the rating. However, a major drawback of this method is that each characteristic is given equal weight and the evaluation may be subjective.

Comparative Evaluation Method

Two ways are used to make a comparative evaluation, namely, the simple ranking method and the paired comparison method. In the simple or straight ranking method the employee is rated by the evaluator on a scale of best to worst. However, the evaluator may be biased and may not judge the overall performance effectively in the absence of fixed criteria. This kind of evaluation may be more opinion-based than fact-based.

Under the paired comparison method, the overall performance of one individual is directly compared with that of the other on the basis of a common criterion. This comparison is all evasive and not job-specific. While some employees emerge as clear front runners, there are others who seem to be lagging behind. This is not a popular evaluation system as employers do not want to encourage discrimination. This is useful in companies which have a limited number of promotions or funds.

Performance Test and Observation Method

This method deals with testing the knowledge or skills of the employees. It can be implemented in the form of a written test or can be based on the actual presentation of skills. The test must be conceived by the human resources department and conducted by a reliable evaluator who has in-depth knowledge about the field of the test. There can be bias if the performance is evaluated on the presentation of skills. However, a written test can be a reliable yardstick to measure the knowledge. Tests will also enable the management to check the potential of employees. However, if the human resources department decides to outsource the compilation of the test, it may incur additional cost for the organization.

Field Review Method

This type of evaluation is conducted by someone outside the employee's department. For example, if an employee is working for a manufacturing team, then someone who deals with him regularly, say a sales personnel will conduct the appraisal. In most cases, the human resources department undertakes the evaluation. While the bias of the department head is eliminated in this form of appraisal, there is a risk that it may not be accurate. This is because the outsiders rarely know about the deliverables of the employee and an honest observation is not possible.

Forced Choice Method

In this method, the appraiser is asked to choose from two pairing statements which may appear equally positive and negative. However, the statements dictate the performance of the employee. An excellent example of this can be "works harder" and "works smarter". The appraiser selects a statement without having knowledge of the favorable or the unfavorable one. This method works in companies where the appraiser shows a tendency to under-evaluate or over-evaluate the employees. Also, it is very costly to implement and does not serve the purpose of developing the employees. It can also frustrate the appraiser as he does not know which is the right option.

Forced Distribution Method

In this method, the appraiser rates employees according to a specific distribution. For example, out of a set of 5 employees, 2 will get evaluated as high, 2 will get evaluated as average while 1 will be in the low category. This method has several benefits as it tries to eliminate the leniency and central tendency of the appraiser. However, its biggest drawback is the fact that it encourages discrimination among the employees. Another major problem with this method is that it dictates that there will be forced distribution of grades even when all the employees are doing a good job.

Essay Evaluation Method

In the essay method of evaluation the appraiser writes an elaborate statement about the employee who is being evaluated. He mentions the employee's strengths and weaknesses. He also suggests ways to improve his performance and appreciates the good qualities. This essay can be prepared by the appraiser alone or together with the employee. As the criteria for evaluation is not defined, it helps the appraiser to focus on the areas that actually need improvement. This open-ended method accords flexibility and eliminates rigidity which is observed in criteria-driven evaluations. However, it is a highly time-consuming and subjective method, and may not necessarily work for the benefit of the organization.

The performance review methods mentioned above are a few of the many that are commonly used across various organizations. Some of the other performance evaluation methods are self-evaluation, confidential records, cost accounting method, psychological appraisals, etc. With these methods, companies today are surely making attempts towards creating a good working environment as well as building the capacity of their employees. Also, performance evaluation is very useful for enhancing the employee-employer relationship.