Performance Evaluation

Performance Evaluation Importance

In business, performance evaluation can bring companies various benefits.

First, performance evaluation allows the management team to make appropriate human resources (HR) decisions such as promotions, transfers, or terminations.

Second, performance evaluation assists HR practitioners in identifying the staff's needs and arranging timely training and development sessions.

Thirdly, performance evaluation enables organizations to give transparent and evident employee feedback.

Lastly, performance evaluation backs companies in providing the basis for rewards, promotions, or pay raises.

Fig. 1 - Performance evaluation is beneficial for businesses

Types of Performance Evaluation

While various types of performance evaluation at work exist, most companies rely on the three most popular criteria to evaluate their employees' performance, which include individual task outcomes, behaviors, and traits.

Types of Performance Evaluation: Individual Task Outcomes

When it comes to individual task outcomes, there are diverse measurement metrics: production quantity, cost per unit of production, overall sales, etc.

Types of Performance Evaluation: Behaviors

When there is a need to evaluate the contribution of each group member to the group's performance, management will try to evaluate the individuals' behaviors to determine their performance.

Types of Performance Evaluation: Traits

Management also refers to individuals' traits at work as a means of evaluation. Modern organizations are greatly concerned about their employees' personalities at work, assuming that good employees with positive traits may perform well.

Accordingly, managers might look for positive traits ranging from a good working attitude, willingness to learn new skills, communicating effectively and convincingly within teams, etc.

Performance Evaluation Process

At the heart of the performance evaluation process lies the question, "Who should evaluate an employee's performance?".

Within modern workplaces, there are two main processes of performance evaluation, which are multiple sources of rating and the 360-degree evaluations. They both require different evaluators to evaluate a specific individual and average the diverse ratings to generalize one's evaluation result. Accordingly, such evaluators can range from managers and subordinates to clients and coworkers. Thus, both processes assist companies in implementing a more objective, unbiased, and equal performance evaluation procedure.

Fig. 2 The 360-degree evaluation is popular

Performance Evaluation Methods

You may now search for methods to evaluate employees' performance. Accordingly, there are five most popular performance evaluation methods at work, which are:

1. Written Essays,

2. Critical Incidents,

3. Graphic Rating Scales,

4. Behaviorally Anchored Rating Scales,

5. Forced Comparisons.

Performance Evaluation Methods: Written Essays

In the written essays method, evaluators evaluate an employee's performance-related characteristics, including individuals' strengths and weaknesses, previous work results, possible work violations, etc. While this is a performance-centric approach, written essays are often subject to no standardized scoring system; thus, managers might find it difficult to compare and contrast between different essays.

Performance Evaluation Methods: Critical Incidents

The critical incidents method aims to separate incidents when employees execute a job effectively from incidents when they do not.

For example, when it comes to a social media marketing team, managers may wish to perform critical incident methods to show employees what should be incorporated into a social media post and what should not be, thus leaving room for future improvement.

Performance Evaluation Methods: Graphic Rating Scales

In the graphic rating scales method, evaluators rate performance factors on incremental scales, often following a five-point Likert scale format. As opposed to the other methods mentioned previously, this method is more time-saving for managers. Further, results from graphic rating scales can be coded as quantitative data for comparison if needed.

Performance Evaluation Methods: Behaviorally Anchored Rating Scales

In the behaviorally anchored rating scales (BARS) method, evaluators combine two methods: critical incidents and graphic rating scales. To execute the BARS method, evaluators should first complete the critical incidents list, followed by ranking these factors on incremental scales.

Performance Evaluation Methods: Forced Comparisons

Forced comparisons allow the organization to compare employees' performance. The two most popular comparisons are individual ranking and group order ranking.

In group order ranking, employees are compared based on a particular classification. For example, marketing evaluators can classify marketers into the top one-fifth individuals with highest generated leads to compare their performance.

In individual ranking, employees are often ranked from best to worst. For example, evaluators can rank marketers from best to worst regarding their total generated leads from email marketing activities.

Performance Evaluation Improvements

Although there is no guaranteed way to achieve 100 percent accurate performance evaluations, there are various ways to improve their objectivity and fairness.

Performance Evaluation: Multiple Evaluators

The more the number of evaluators, the higher the accuracy of information gets. Thus, organizations can improve the quality of performance evaluations by inviting multiple evaluators to assess an individual's performance.

Performance Evaluation: Selective Evaluation and Evaluator Training

To improve agreement among evaluations, raters should only rate areas of their expertise. Further, raters should work closely with the evaluatee to ensure they can objectively observe the individual's behavior and traits.

Besides, organizations should properly train evaluators to develop a standard definition of good performance at work. Also, evaluators should be encouraged to give more detailed descriptions of individuals' behaviors to validate their evaluation.

Performance Evaluation: Due Process Systems

Due process is an emerging method in modern workplaces to improve fairness in performance evaluation.

What are the typical characteristics of due process systems?

There are three main characteristics of due process systems:

1. Individuals know exactly what the organization expects from them.

2. There is a fair hearing regarding violations to encourage the employee to respond.

3. The final decision relies on evidence, not bias.

Performance Evaluation Examples

How is a real-life written essay in performance evaluation? Let us guide you through a typical example in a business context.