6 of the top performance appraisal types

1. 360-degree method

The 360-degree method is an effective tool for evaluating managers, since it involves gathering feedback from everyone who interacts with the manager, including their subordinates, peers and supervisors.

Insight from subordinates enables managers to understand how their leadership affects their team.

2. Management by objectives

Management by objectives is a process in which managers and their direct reports set specific, measurable goals prior to the employee's review, then they assess how effectively those objectives were met. The four steps are setting the goal, developing plans for accomplishing the goal, monitoring progress and evaluating the results.

Management by objectives is particularly useful for evaluating jobs in which successful performance is tied to achieving specific targets.

3. Behaviorally anchored rating scales

The BARS approach assesses employees by matching their behavior to predetermined numerical ratings. It is considered to be less subjective than other methods because the standards are clearly defined, so employees hopefully understand what is expected of them.

Managers first identify the behaviors that are critical to employee success, then decide which criteria are relevant to the specific employee's role and will be part of their evaluation. Managers then create behavioral anchors, or descriptions that illustrate potential behaviors employees might exhibit and that are linked to a numerical scale.

While creating BARS scales is time-consuming, the method is still considered useful for assessing performance for jobs in which employee behavior is linked to success, such as customer service or HR, where empathy is key to ensuring employee engagement.

4. Forced ranking

Forced ranking is considered to be a highly problematic approach to performance evaluation. Former General Electric CEO Jack Welch advocated categorizing employees into top, middle and bottom ranks, then rewarding the top tier, encouraging the middle tier to improve and potentially terminating the bottom tier. Forced ranking was frequently used as justification for decisions about employee layoffs during companywide reductions in force.

Forced ranking is no longer widely used because it can result in unfair termination lawsuits.

5. Narrative appraisals

Narrative appraisals involve managers writing detailed descriptions of their direct reports' strengths and weaknesses. The descriptions are typically completed in conjunction with employee self-assessments.

The approach can be useful despite its highly subjective nature, as it encourages self-awareness from both managers and employees. The drawback is that some participants are unrealistic in how they view their own performance, and managers might be unrealistic about their expectations for employees.

6. Continuous performance management

Regardless of which performance appraisal method or combination of methods an organization uses, making these evaluations an annual event has fallen out of favor over the past decade.

Arguably, the best model for performance reviews is continuous performance management, in which managers provide ongoing check-ins and feedback sessions throughout the year. These check-ins can be informal meetings or incorporate other performance review approaches. The key to following this model is to avoid evaluating performance based on once-a-year appraisals, but instead to do so by creating a continuous dialogue between managers and their teams.

Lynda Spiegel is a freelance writer and former global HR executive for financial services, telecommunications and SaaS companies.