04. Employee Evaluation Techniques

 

The employee evaluation process is not only a tool for assessing job performance but also a strategic mechanism for improving employee motivation, development, and organizational efficiency. Various techniques are employed to assess employees, each with its own strengths, weaknesses, and suitability for different organizational contexts. (Aguinis, 2019; Dessler, 2019).

  The objectives of performance evaluations include identifying strengths and weaknesses, setting goals, providing feedback, and making decisions related to promotions, compensations, or terminations (Armstrong and Taylor, 2020). Various methods are used to evaluate employee performance, each offering different insights into the employee's capabilities and potential for growth. An effective employee evaluation technique can contribute significantly to organizational success by aligning employee goals with company objectives, enhancing motivation, and fostering a culture of continuous improvement (Robinson and Judge, 2019).

Common Employee Evaluation Techniques

 1.     The Rating Scale Method 

    The "rating scale method," which uses a numerical scale to rate an employee's performance on a number of predetermined criteria, is one of the most popular employee evaluation strategies. These requirements could include, among other things, interpersonal skills, job expertise, work quality, and timeliness. Usually, the scale has a number range (e.g., 1 to 5) or goes from "unsatisfactory" to "excellent." This approach is widely used in many businesses because it is straightforward to use and comprehend (Aguinis, 2019). However, it has its limitations, including the risk of central tendency bias, where managers may rate all employees as average, or leniency bias, where employees are rated too favourably (Robinson and Judge, 2019). 

2.      360-Degree Feedback

    A comprehensive evaluation technique known as "360-degree feedback" gathers input from peers, superiors, subordinates, and the individual themselves. This approach provides a well-rounded view of an employee’s behavior and performance at work. It is particularly helpful for determining areas for growth and strengths from a variety of angles. It also promotes an open and continuous improvement culture by fostering communication at all organizational levels (Armstrong and Taylor, 2020). But if not handled well, this approach can be time-consuming and susceptible to feedback biases (Aguinis, 2019). 

3.      Self-Assessment

    Self-assessment involves employees evaluating their own performance. Typically, employees reflect on their work, strengths, weaknesses, and progress towards set goals. This technique can be empowering, as it encourages employees to take responsibility for their development. It also allows organizations to understand how employees perceive their own performance and areas for improvement (Robinson and Judge, 2019). However, self-assessment may be subjective, with employees potentially overestimating their own performance or avoiding constructive criticism. To address these issues, self-assessments are often combined with other evaluation techniques to provide a more comprehensive evaluation (Miller and Monge, 2019).

4.     Management by Objectives (MBO) 

    A performance review technique called Management by Objectives (MBO) involves managers and staff working together to establish SMART (specific, measurable, achievable, relevant, and time-bound) goals. The effectiveness with which these goals have been met is then used to assess the employee's performance. Because MBO is so goal-oriented, it works well to make sure that workers' efforts complement those of the company. Because workers are able to monitor their progress and have a clear understanding of the objectives they are pursuing, this approach increases motivation (Aguinis, 2019). MBO, however, necessitates ongoing oversight and could result in an excessive focus on immediate goals at the expense of long-term growth. 

5.       Behavioral Anchored Rating Scale (BARS)

    The Behavioral Anchored Rating Scale (BARS) method combines elements of the rating scale and critical incident techniques. BARS involves identifying specific behaviours that are associated with various levels of performance for each criterion. These behaviours are then used as anchors on the scale, providing a more objective assessment compared to generic rating scales (Armstrong and Taylor, 2020). BARS enhances clarity and reduces biases, as it focuses on observable behaviours rather than abstract traits. However, creating and maintaining a comprehensive set of behavioural anchors can be time-consuming and requires regular updates to stay relevant to the organization’s goals (Miller and Monge, 2019).

6.       Critical Incident Method

    The critical incident method involves noting specific examples of very good or poor performance. These examples are then used to help evaluate an employee’s overall work. This method gives detailed and timely feedback, helping employees see how their actions affect their job. It’s especially helpful when performance varies a lot or the job is complex (Dessler, 2019). However, since it focuses only on certain incidents, it might miss the bigger picture or overlook important work that isn’t as visible.

Video 2.0 :  Performance Appraisal Methods

Below Video 2.0  will further discuss the Performance Appraisal Methods ((ED EASY Channel, 2021)

    The BPO industry is increasingly integrating digital tools and real-time monitoring systems into employee evaluation processes. Performance dashboards, analytics software, and AI-driven evaluation platforms offer continuous tracking of KPIs, allowing managers to provide instant feedback and coaching (Zhang et al., 2025). These tools enhance objectivity and reduce the delay between performance and recognition or correction.

    However, overreliance on digital metrics can result in employee stress and an overemphasis on quantity over quality. Therefore, BPOs must balance real-time data with human judgment to ensure holistic evaluations (Aguinis, 2019).

    In conclusion, employee evaluation techniques help companies check and improve how well employees are doing, match personal goals with company goals, and boost overall productivity. Methods like rating scales, 360-degree feedback, and management by objectives each have their own strengths, but can also face problems like bias or needing a lot of time and resources. To make evaluations work well, companies should choose the right methods for their needs, use clear standards, and keep the process fair and open. When done properly, employee evaluations lead to better performance, more motivated staff, and greater success for the company. 

References

Aguinis, H., 2019. Performance management. 4th ed. Chicago: Chicago Business Press.

Armstrong, M. and Taylor, S., 2020. Armstrong's handbook of human resource management practice. 15th ed. London: Kogan Page.

Dessler, G., 2019. Human resource management. 15th ed. Pearson.

Miller, A., and Monge, P.R., 2019. Managing human resources. 6th ed. Chicago: McGraw-Hill Education.

Robinson, S.P., and Judge, T.A., 2019. Organizational behavior. 18th ed. Harlow: Pearson Education.

Zhang, C., Luo, M., Li, F. and Li, H. (2025). Performance Evaluation Practices of Selected BPO Companies and its Effect to Employee Productivity. Journal of Business and Management Studies, 7(1), pp.25–43.  https://doi.org/10.32996/jbms.2025.7.1.3

ED EASY Channel 2021. Performance Appraisal Methods. [video], from  https://www.youtube.com/watch?v=nmRc2lgru28