What is the performance appraisal method that places a predetermined percentage of employees into performance categories?

The performance appraisal method that places a predetermined percentage of employees into performance categories is called Forced Ranking. In this approach, employees are ranked against each other, and a specific percentage must fall into each performance category, such as top performers, average performers, and low performers. This method is often used to distinguish high performers from low performers in a workforce and can create a competitive environment among employees.

Forced Ranking is distinct because it requires evaluators to make distinctions between employees often leading to a bell curve distribution of scores. This can be beneficial in identifying talent and making decisions regarding promotions or developmental needs. However, it can also foster a sense of competition that may not align with team collaboration and could potentially lower morale among those who find themselves ranked lower.

Other methods like Peer Review focus on colleague assessments, Continuous Feedback emphasizes ongoing discussions about performance rather than formal evaluations, and 360-Degree Appraisal gathers feedback from various sources including supervisors, peers, and sometimes subordinates, without necessarily enforcing a specific distribution among performance categories. Each of these approaches has unique objectives and mechanisms distinct from the structured approach of Forced Ranking.