3 Best Types Of Performance Appraisal Methods

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The three best types of performance appraisal methods are 360° feedback, management by objectives and using ratings scales. In this article, I’ll show you the advantages and disadvantages of each method and what types of company they are best applied to.


360° feedback is a common approach used by small companies and consultancy firms. It involves managers interviewing peers, supervisors, direct reports, clients, etc. who have had and interaction with the employee (who is being assessed). These interviews need to be quite formal and focus in on a couple of key traits such as productivity, leadership, professionalism, etc. The real setback of this technique however is the volume of interviews can make this a very time-consuming task. It should however give you a better picture of how the individual is performing over the duration of the year and what type of productivity improvement ideas may be required for under-performing staff.

Management by objectives has been used since the 1950s to clearly set out goals for employees their expected to achieve within the appraisal here. These types of performance appraisal methods focus on setting clear, measurable, achievable goals which need to be successfully hit by a specific date in order to be deemed successful. Managers of sales staff are particularly fond of this approach as it allows them to set specific sales targets. The employees also feel they have more involvement in the collaborative nature of this approach and the opportunity it provides to set their own goals.


The use of ratings scales is something quite similar to how grades are applied within schools. Companies have to develop their own in-depth grading system for evaluating employees based on a number of different factors (teamwork, motivation, timeliness, etc.). This works really well in larger companies or long-established firms with well-established operational procedures which can easily be graded. This technique is also very effective at comparing the performance of various employees in a standardized and consistent manner.

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