We have all been part of the performance appraisal cycle at some point or the other.
In a company, performance appraisal can be defined as the process of assessing the progress and performance of employees in their respective jobs and identifying their scope for future development.
What does performance appraisal mean for your sales teams? For a lot of organizations, it is the yearly or the half-yearly tradition where managers conduct sales performance evaluations and give sales reps scores based on a predefined grading system or measure them on different sales KPIs. An employee’s past performance is the focal point of the assessment. A one-on-one meeting is held with each employee and feedback on how well they fared is given for the entire year or 6 months – although 94% of employees surveyed, prefer real-time feedback from their managers.
Performance appraisal can be classified into 2 kinds, one is the traditional method and the other, the modern method. While the traditional model consists of the grading system or checklist methods, the modern approach employs approaches like the 360-degree feedback, psychological appraisals and the management by objectives (MBO) method.
In this post, we will give you the lowdown on the traditional performance appraisal methods and look at the drawbacks of this system.
Traditional performance appraisal methods
Traditional performance appraisal methods lay emphasis on an employee’s personal traits such as knowledge, dependability, drive, leadership, loyalty, judgement, etc.
To help you understand this better, we’re going to dive into a few common examples of the traditional performance appraisal methods.
a) Rating scales method
This is a popular technique where a rating scale is used to assess the performance of employees against certain parameters like attitude, punctuality and interpersonal skills. The scale ranges from 1 to 10, 1 being the lowest rating and 10 being the highest.
b) Essay method
Under this method, the evaluator writes a detailed description of an employee’s conduct and performance. The quality of this appraisal method is dependent on the evaluator’s writing ability which in turn makes it hard to compare an employee’s performances with that of their peers.
c) Checklist method
In this method, a checklist is prepared with a list of statements related to the characteristics and performance of employees. The manager ticks/checks the statements if an employee displays a particular trait or quality.
d) Forced distribution method
This method is quite popular with large organisations. It’s based on the fact that different employees have varying levels of performance, some would be more productive than others. Here the evaluator is forced to distribute employees on all points of a bell-shaped frequency distribution chart. Some end up in the outstanding zone to the right of the curve, some are average performers forming the bell shape of the curve and others fall into the bottom end of the scale to the extreme left. The drawback here is that the evaluator cannot explain why they have put an employee in a particular category.
e) Confidential report
This is a traditional method of performance appraisal that’s generally used by government organisations for conducting appraisals. Under this method, the evaluator prepares a report on the employee’s strengths, weaknesses, achievements and failures. The drawback of this method is that it’s entirely based on the impression that an employee has created in the minds of his superiors rather than on actual data.
Limitations of the traditional performance appraisal methods
Traditional performance appraisal methods aren’t quite popular. According to Gallup, employees dislike them, managers struggle to perform them, and the management sees very little tangible benefits coming from them. Yet these performance review methods are an integral part of our work lives and surface every 6 or 12 months.
Here are a few alarming statistics about traditional performance appraisal methods.
A survey conducted in the UK revealed that 74% of employees felt that these performance review methods weren’t useful in any way, that they were pointless and time-consuming.
Research by CEB found that only a meagre 5% of managers are satisfied with the quality of traditional performance reviews and only 10% of HR managers found them to be effective.
According to a survey conducted by Yoh, 24% of employees were looking at quitting their jobs due to inadequate performance feedback.
A Gallup research stated that 32% of surveyed employees had resigned from their jobs due to a lack of promotional opportunities.
The methods aren’t well appreciated as they are perceived to be subjective in nature. The performance appraisal is largely based on the appraiser’s personal judgement of an employee. The evaluator can go wrong with his judgement and is not free from displaying bias or personal prejudice.
Here are some of the limitations of the traditional performance appraisal methods:
1) Frequency of the performance appraisal
One of the major problems with the traditional approach is the frequency of the reviews. The appraisal happens once or twice a year. Rating an employee’s performance after 6 months or after a year has gone by, does not help in identifying and fixing performance-related issues in a timely manner. The evaluation is most likely to be influenced by their most recent work and interactions which are prominent in the minds of their superiors.
Employees, especially those in the sales field need regular feedback on their work – this motivates sales teams to hit their targets and perform better! The Growth Divide Study reveals that 81% of employees surveyed, would prefer to have feedback sessions every quarter. Regular feedback will keep them focused on their most important goals and supercharge their productivity in sales.
2) Employee development takes a back seat
Traditional performance appraisal methods take stock of an employee’s past performance. Employees and companies alike are unclear about how much these methods have a part to play in employee development. Generally, performance appraisals do not focus on improving an employee’s skills and abilities.
3) The halo/horn effect
This takes place when an evaluator focuses on one strong work characteristic of an employee and allows it to dominate their evaluation. It can be a positive (Halo) or a negative (Horn) incident that occurred during the course of the employee’s job. The evaluation, in this case, is not accurate but based on a misguided generalization.
4) Strictness or leniency of the appraiser
Some evaluators are strict, while others are lenient. A strict appraiser may assign low scores and a lenient one may assign high scores. These differing tendencies of appraisers affect the evaluation of employees.
5) Central tendency
Sometimes evaluators play safe and tend to give an average rating to all employees. This could be due to a lack of sufficient information about an employee’s performance or lack of time or an attempt to avoid confrontation and controversy. This tendency brings about distortion and a lack of objectivity to the appraisal system.
Continuous performance management is the need of the hour
These flaws have given rise to the method – ‘continuous performance management’ where as the name suggests, the appraisal process is ongoing and takes place throughout the year. Companies like Adobe was quick to ditch the traditional method for this continuous performance approach. Regular check-ins, one on one meetings, continuous feedback and conversions make continuous performance management a great alternative to the traditional performance appraisal methods.
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