Performance appraisals are crucial for employee development and organisational success. However, choosing the right appraisal method can be challenging. Two popular options are 360-degree feedback appraisals and linear appraisals. Each has unique strengths and weaknesses, making them suitable for different organisational contexts.
Let’s delve into these appraisal methods to help you determine which best aligns with your needs.
What appraisal methods must businesses consider implementing in the workplace?
Below are a couple of performance appraisal methods you can consider implementing in your organisation.
A. 360-Degree Feedback Appraisal
Also known as multi-rater feedback, a 360-degree appraisal is a performance appraisal method where employees get feedback on their productivity and contribution to the organisation, not just from their direct managers and supervisors but from other staff and even customers.
This 360 appraisal system will require about 6 – 10 contributors arranged into different groups based on their relationship with the focus employee (supervisor, peer, subordinate, and client, where applicable) to complete an anonymous survey or feedback form.
The raters respond to questions that score the focus employee on skills like leadership, communication, competency, etc. The feedback form will include responses from the subject and should preferably be managed by an external appraiser.
Benefits of 360-degree feedback appraisal
- Builds employee development: This feedback method shows the employee how others see them as compared to how they see themselves. It allows them to be more self-aware and understand their strengths and weaknesses and see growth opportunities. This 360 appraisal evaluation system helps employees understand how their behaviour affects the quality of their work and other employees in the workplace. Armed with this information, employees can identify their training needs and can be more effective in their roles and better contribute to organisational growth.
- Improved customer service: In cases where clients and customers complete this survey, employees get an insight into how the consumers perceive them so they can work on their customer service skills and learn to build better customer relationships. This, in turn, improves customer experience and brand perception from your customers. The resulting positive customer experience helps your customers become brand advocates, ultimately improving organisational profit.
- A platform for objective feedback: Since several people contribute to 360-degree appraisal system, the feedback is more valid, objective, and holistic. While one person’s opinion can be biassed, having similar feedback from multiple individuals is more likely to be accurate.
- Builds motivation: Positive feedback from multiple raters (contributors) helps to build the focus employee’s confidence and strengthen their motivation to do better work. The employee is likely to do better in that area and take the time to improve on those strengths. At the same time, the employee is also encouraged to build other strengths and work on their weaknesses.
- Allows for anonymity: Because of the anonymous nature of this 360 degree performance appraisal, the focus employee can understand how their team members and colleagues perceive them without directing animosity at anyone. This makes it easier to get employees to provide honest feedback on their colleagues without dealing with the backlash.
Drawbacks to the 360-degree feedback appraisal
- Conflicting opinions: Due to different relationships between colleagues in an organisation, Feedback can be conflicting and lead to debate on which appraisal is more accurate. Contributors with personal grievances against the focus employee may lack objectivity, focusing on the negatives. This leads to tainted feedback which provides no real value.
- Less effective in smaller organisations: In smaller organisations, 360-degree feedback method can be less effective as there are fewer opinions, giving more room for bias. It’s also easier for personal grievances can affect ratings in small organisations.
B. Linear Appraisals
This is a performance management appraisal method with just two people – the employee and their direct manager. The employees’ performance is rated based on the feedback from their manager, and decisions are made based on the results provided. In the linear appraisal method, employees are evaluated based on their KPIs/OKRs (held up against the organisation’s objectives) and other performance metrics like behaviour, leadership, competency, and adherence to the company’s core values.
Benefits of linear appraisals methods
- Improves communication: Linear appraisal involves constant communication between the employee and their supervisor. So, throughout the appraisal period, the employee receives constant feedback and other recommendations to improve their productivity from their manager. Linear appraisals give managers and direct reports room to have the sometimes uncomfortable but necessary conversations needed for employee and organisational growth.
- Provides direct motivation: The linear appraisal method is set up so that the supervisor acts almost like a mentor in guiding employees on their career journey by providing feedback on their weaknesses and praising wins while encouraging employees to do better.
- Helps in planning learning and development: Since the manager is directly involved in the employee’s growth, training specific to the individual employee’s needs can be planned and set up. This way, the organisation knows the training employees need to increase productivity and meet organisational goals.
- Directs promotion and other post-appraisal actions: A linear appraisal is effective for identifying specific areas of strengths in an employee. Managers can then recommend them for either a promotion, redeployment, demotion, or that the employee remains on their current level, as they deem necessary.
Drawbacks to linear appraisals methods
- The halo effect: The halo effect happens when one person is positively biased towards an employee and focuses on their strengths while ignoring weaknesses. This makes it difficult to recommend an improvement for the focused employee.
- The focus effect: This is the opposite of the halo effect. In this case, a personal bias or grievance against the employee can negatively affect their appraisal. This makes the supervisor focus on only their weaknesses while downplaying or forgetting their wins.
- Time constraints for managers: In larger companies or in companies with a larger manager to direct report ratio, appraising each employee under the supervisor or manager can be a time-consuming process for the manager. This is worsened if the company uses a manual performance management process where the manager is expected to fill out paperwork detailing each employees’ strengths, weaknesses, and achievements.
How to choose the right performance appraisal method for your organisation
The best appraisal method depends on your organisation’s size, culture, and objectives:
360-Degree Feedback System:
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- Ideal for larger organisations with diverse teams and complex roles.
- Suitable for fostering a culture of feedback and continuous improvement.
- Effective for developing leadership skills and promoting teamwork.
Linear Appraisal:
- Appropriate for smaller organisations or teams with clear reporting structures.
- Effective for providing focused feedback and driving individual performance.
- Suitable for organisations that prioritise direct communication and manager-led development.
- Very good for companies that need to quickly and efficiently give feedback.
Hybrid Approach
Some organisations opt for a hybrid approach, combining elements of both methods. For example, they might use 360-degree feedback for leadership development and linear appraisals for routine performance evaluations.
Whichever appraisal method you choose, you need a performance management software that helps you build a high-performing team by aligning individual and departmental goals to organisational objectives while managing the appraisal process from start to finish. SeamlessHR performance management software has been built for this.
