Comparing Different Types of Performance Evaluation & Appraisal Methods

Comparing methodologies for different types of performance evaluations. Look, listen & communicate effectively no matter which approach you use

by Rod Dunne on May 6, 2011

in Creative, Human Side

Have you considered which types of performance appraisal methods work best? There is a huge range of performance management tracking & review systems to choose from, but in principle modern organizations use three in particular.

Each of these have their pros & cons you need to consider before use.

These are (i) management by objectives, (ii) 360 degree performance appraisals and (iii) ratings scales.


Each has their pros and cons depending on the type of organization you have and your  strategies for improving productivity and communication skills in the workplace.

The quarterly or annual performance appraisal method you choose can have a huge bearing on the motivation and assessment of your employees. In basic terms, an appraisal is a formal interaction between employees and their managers to identify strengths and weaknesses in their work throughout a set time period.

It also has to be forward-looking towards different opportunities which the employee should be pursuing in order to advance their career. A huge amount of small-scale business ideas can come from your own employees.

It is not just an opportunity to put bad comments on performance reviews regarding past performance. With this in mind, it often has a bearing on what types of promotions your employees can expect.

Management by objectives (MBO)

Management by objectives (MBO) is a popular performance appraisal method used by organizations to assess employees based on a list of SMART objectives. The employee and their manager sit down at the start of a time period and work out SMART objectives for them to attain.

The objective need to be specific, measurable, attainable, relevant and timely (SMART). Suggest your own comments & phrases for a performance evaluation which satisfy each of these objectives.

Importantly, the objectives are collaboratively decided upon between the employee and their manager. Peter Drucker (the famous management theorist) came up with this approach back in the 1950s.

Example: These types of performance appraisal methods are popular with sales staff and within software engineering enterprises. Being able to define specific goals, objectives and performance evaluation phrases is relatively easy in these two areas so the technique is well-suited.

Benefits of this technique:

In comparison to other types of performance appraisal methods:

  • MBO is less time-consuming than 360° feedback. The streamlined approach is often suited to small companies whereas 360° feedback requires several interviews in order to gain an assessment of one individual. There are also plenty of performance evaluation examples online given MBO has been around since the 50s.
  • MBO is merit based. By contrast, the rating scale performance appraisal method is more scientific but does not put same emphasis on merit spaced objectives as seen in MBO.

360-degree feedback (also written as 360° feedback)

360° feedback is one of the more common business improvement techniques used in modern organizations, especially for building stronger teams. This annual performance appraisal method depends upon having a manager/appraiser interviewing peers, colleagues, supervisors and managers of the person being appraised for feedback relating to the employee.

An employee is assessed based on technical elements as well as their behavior & character throughout the time period. This level of subjectivity means that a broader range of assessments feed into evaluating each employee’s performance.

The use off off-line/online business systems to create the various feedback forms becomes a necessity.

Example: This performance appraisal method is popular in consultancy houses and companies where individuals work on several different projects. Employees who move from project to project won’t have set supervisors for long periods of time so more rounded & all-inclusive types of performance appraisal methods are required.

Benefits of this technique:

  • Does away with the danger of one bad appraisal affecting an employee’s promotion opportunities.
  • Highly effective for organizations where employees are involved in several projects, responsibilities or roles. Staff performance appraisal comments can come from several managers and supervisors of your employee.

In comparison to other types of performance appraisal methods:

  • 360° feedback reduces the danger of employees being appraised badly due to only having one assessor. This is a common flaw seen in both the management by objectives method and the rating scale methods.

Rating scale

Using a rating scale is one of the more scientific approaches to appraising staff. It involves employers deciding upon their own grading system to be used for assessing all of their employees. Supervisors assess their direct reports based on this grading system, in much the same way as children in school would be assessed.

The range of areas where staff are assessed normally includes technical areas, leadership, communication skills, motivation, etc. The concept with this approach is to make use of example performance review comments you use the subjective or personal.

Example: This approach has often been popular within large financial institutions. Companies with well-established operational procedures can often implement grading systems to establish how employees are performing in comparison to these well-formed operational norms.

Benefits of this technique:

  • Provides a certain amount of equality in assessing employees.
  • Can be used for comparing various employees doing the same roles when deciding upon promotions.

In comparison to other types of performance appraisal methods:

  • The rating scale method is better used in large companies where individuals are doing fairly similar roles. Each can be assessed comparatively. This is something which cannot be done with the management by objectives technique so easily.
  • The rating scale method is also quite scientific and streamlined. Appraisal tasks can be done quite quickly and systematically. These types of performance appraisal methods are certainly a lot quicker than the numerous interviews required for the 360° appraisal technique.

Related posts
When is a right to use sample phrases in performance review appraisals?
Annual performance evaluation phrases … and how to use them!

Author Rod Dunne...

Blog owner and sole writer Rod DunneI am the owner and sole writer on Product-ivity.com. This is my personal blog detailing troubleshooting tips for small businesses. Posts are based upon 2 decades in consultancy & innovation management within startups/maturing companies.

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