Employee Performance Evaluation | 10 mins read

Why Employee Performance Evaluations Matter and More

why employee performance evaluations matter and more
Mary Kate Morrow

By Mary Kate Morrow


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An employee performance evaluation is often a dreaded and stressful annual event. However, there are many best practice techniques that can help you prepare existing and new employees for their annual performance reviews.

What are Employee Performance Evaluations?

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Employee performance evaluations are a method that measures how effectively an employee is fulfilling their job description and contributing to their company's overall business objectives in comparison with preset standards. The employee performance review process helps identify areas improvement can occur and ensures that performance standards are being met.

The employee performance review is the basis from which an employee manager decides which employees should be promoted, given a raise, or dismissed from the company. The feedback employees receive from their review process allows them to understand their work performance over the specific evaluation period used.

Effective employee performance management necessitates that a manager understands an employee's job description and develops a review process that shows how effectively an employee is performing. Employee performance management often combines tools like an annual employee performance evaluation with observations of their employee at work and ultimately providing feedback.

The best employee performance evaluation processes make sure to provide employees with specific examples of where they can improve poor performance and sets performance goals for employee development long term.

Performance reviews can assist businesses in understanding where they have room for improvement as well. If employee performance is consistently poor, there may be a larger issue with the business itself. Performance evaluations should be used when creating and updating existing organizational policies and practices.

For example, there may be an issue with your human resource department and how they select candidates for a role. Or, your human resource staff may not be providing the proper training or professional development that employees need.

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What Makes a Good Performance Evaluation?

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When employees know what to expect during an annual performance review they are much more comfortable and confident. Good performance review best practices to consider when developing your employee performance review process include-

1. Clearly communicate expectations- Communication skills are an important aspect of any performance review process for everyone involved. Even before employee performance reviews your employee should be provided with a clear job description and work performance expectations.

Communication skills allow for your employees to know what is expected of them and potentially exceed expectations. Additionally, communication skills are crucial to providing both positive and negative feedback.

3. Establish goals- The review process is a great time to create, measure, and reevaluate employee goals. Employee evaluation should always encourage the opportunity to set performance goals for the future.

When an employee manager is aware of their employee's performance goals they can provide more chances for the employee to reach their set goals over time. For instance, an employee may set goals that express a desire to want to take more responsibility in the workplace.

In response, your employee manager may use the evaluation period to create situations to observe in real time how an employee would handle additional responsibilities. If an employee is struggling to set goals your human resource department can provide specific examples of goals that people with a similar job description have previously set for themselves.

4. Self evaluation opportunities- Employees should be given the chance to perform a self evaluation during their review. Poor performance areas can be explained by the employee before they are pointed out by the employee manager.

A self evaluation also allows an employee to showcase achievements that may have been overlooked by the employee manager during the evaluation process and creates an open feedback dialogue. Self evaluation promotes employee morale and can improve employee performance long term.

Consequences of Poor Performance Evaluations

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Poor performance evaluation has a wide range of consequences in both the short and long term. These consequences include-

1. Employee defensiveness- An annual performance review can be stressful for an employee and being told they had poor performance can lead to defensiveness and shutting down. Make sure your performance management best practices give employees an opportunity to formally respond to performance evaluations.

If an employee feels the performance review process was unfair or biased it is important that your human resource team hears their concerns. A poor performance review does not have to be completely negative especially if an employee feels heard and validated. Whether your employee decides to shut down or to use their poor performance review as motivation to improve depends majorly on your performance management system.

2. Monetary concerns- When employee appraisals are the main decider of whether an employee receives a raise or bonus, a poor performance review can be devastating for future employee performance and morale. Make sure to clearly outline how an employee can improve performance before the next evaluation period and receive the compensation that they are working for.

3. Reduce morale- Some employees receive a huge boost in their performance by being recognized publicly for their contributions to the business. An employee who receives negative feedback may feel embarrassed or that they let their team down inadvertently.

If negative feedback is not constructive there can be major consequences to your company culture and overall work environment. Additionally, a low morale employee is much more susceptible to turnover and conflict.

How to Conduct a Performance Evaluation

Understanding how important performance appraisals are for a business, how should you best conduct one? Many employees feel that their annual performance appraisal is the most stressful work conversation they expect to have the entire year.

Management employees also share this stress, which can lead to some really ineffective and uncomfortable communication. Strategies for how to effectively perform performance appraisals include-

1. Provide clear expectations- Employees should understand the evaluation system that employers use to measure their performance. If employees are unclear about what they are being evaluated on, they will likely feel stressed, confused, and discouraged.

Make sure employees know what is expected of them from the time they are given their job descriptions onwards. Experts suggest holding a performance planning meeting with each employee at the start of the year.

In this meeting, employees can set goals and employee managers can clearly communicate their expectations and what performance goals will be evaluated during the upcoming performance review. A performance planning meeting is a great way to improve performance and decrease the stress levels of everyone involved in the performance appraisal process.

2. Outline the evaluation process- Experts suggest about two weeks before official employee evaluations that employees are given the opportunity to fill out an appraisal form detailing their accomplishments. Not only will this provide management employees with a refresher on any employee accomplishments they may have overlooked, but it frames the evaluation process positively before it begins.

Additionally, before you evaluate employee performance take time to review your notes taken regarding that employee over the year. These notes could include anything, ranging from instances of high quality work or time management problems you want to address.

A small business will likely have a more comprehensive idea about each employee and their performance over the year. Larger corporations may need to check in with the human resource department to review any complaints or issues that arose over the year that the performance review administrator may not have prior knowledge of.

Regardless if you are a small business or large corporation it is helpful to check in with people who work closely with the employee who is being evaluated before the official performance appraisal occurs. The more independent employee evaluations you can gather, the better equipt the appraiser is to provide comprehensive feedback.

3. Do not blindside your employee- Few things are more stressful in the workplace than an employee going into a performance review feeling that they will receive good performance ratings and alternatively being faced with negative feedback and a poor performance review they did not see coming.

Performance management experts suggest providing your employee with a copy of their appraisal before the employee evaluation begins. This provides your employee the opportunity to review what will be discussed in the privacy of their own office and to process some of their emotions before entering the official review.

Evaluation forms should be provided where appropriate before the review to encourage your employee to give their own feedback. Allowing time for your employee to process and prepare their talking points not only increases communication skills but allows for a more effective performance review overall.

4. Set tone- The performance review process is often structured as a feedback sandwich that gives compliments, criticism, and then ends with more compliments. Effective performance appraisals should not avoid providing negative feedback or harsh critiques, so long as they are actionable and constructive.

Employees with consistently poor performance will not likely improve if they are provided a feedback sandwich that allows them to overlook negative feedback by focusing on praise. However, for consistently good performance workers, you should definitely focus on what they are doing well to encourage them to continue producing quality work and improve morale.

5. Performance rating clarification- Many people wrongly assume that the traditional 1-5 performance rating system is analogous to the A-F grading scheme used in schools. Clearly communicate to your employees that a 3 does not mean average but instead means that they are meeting performance expectations adequately.

Clarifying this can stop employees from feeling that they had poor performance when they are hitting performance goals sufficiently. Performance planning meetings should always make sure to cover the performance rating scale used to evaluate employee performance.

5. Be specific- When giving employees feedback about their job performance make sure to give specific examples. Instead of saying "Your time management skills need improving" try saying instead "I've noticed a consistent pattern of you being 20 minutes late on certain days of the week."

Not only does providing more specific examples allow employees to explain their side of the situation, but it provides them with opportunities to meet your performance standards in the future. Perhaps an employee struggling with time management has a need to start their shift earlier because of a child care conflict or traffic issues. Once the issue is identified, you and your employee can work together to find a constructive solution.

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Managing Key Performance Indicators Effectively

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Key performance indicators are regularly included in performance evaluations and as a part of performance management systems. The following steps should be considered when creating and measuring key performance indicators-

1. Define- Many people thing key performance indicators are something that they are not. Clearly understand what KPIs are and are not, including satisfaction surveys, performance goals, and employee productivity. KPIs must be clear and measurable indications of performance results.

2. Evaluate- Whether you are a small business or large corporation it is never helpful to have too many KPIs. Make sure that the KPIs you have are important, easily understood, and actionable.

3. Develop- Set goals that are measurable, clearly worded, and specific. When creating new KPIs, revisit existing performance goals to make sure that they are measurable.

4. Focus- Brainstorming is great for a variety of business functions, but not for KPIs. KPIs must evaluate specific business processes and create measurable performance standards for each.

5. Incorporate- Developing KPIs outside of the employees who are performing them is a sure way to develop unrealistic KPIs.

Request employee feedback on existing KPIs and consult with employees before developing new KPIs. If a KPI is not reasonable it will actually decrease quality work and employee performance instead of increase it.

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