How Does a Performance Evaluation Help Improve Employee Efficiency?

• Kissflow

A performance evaluation is a crucial tool used by businesses to manage and improve how their employees operate. This article will help you to understand the direct link between carrying out regular and structured performance evaluations and the characteristics of productive and efficient employees.

What is the purpose of a performance evaluation?​

A performance evaluation is a multi-faceted process and has several objectives:

1. To improve individual performance and motivation

Performance evaluations aim to provide meaningful feedback to employees on their past performance, enabling them to identify areas of strength to continue or build upon, areas of weakness to improve, and areas of opportunity to harness for the future. It’s also often the case that giving employees and line managers dedicated and regular time together to discuss performance can help individuals feel more positive about their jobs and improve their morale and motivation.

2. To improve organizational performance

High performing individuals have the skills and knowledge to contribute toward business success greatly. It’s often said that people are an organization’s most powerful resource, and this is true in many regards. Investing in improving the performance of your employees, therefore, can yield real dividends in better organizational performance.

3. To create a high-achieving, learning culture

Top talent want to work for a company that values their contribution and works in partnership with them to highlight, reward, and encourage good performance. A good performance evaluation system can therefore really help you to recruit and retain skilled employees.

4. To highlight and rectify poor performance

A structured performance evaluation process is a vital way of identifying performance that is not up to standard and helps to work collaboratively with employees to improve it through training, coaching, or even demotion or dismissal.

Why employee evaluations need automation

It is hard to disagree with the many benefits that employee evaluations can bring to an organization. So why do so many companies fail to implement an employee evaluation process with success, or even bother putting one in place at all?

One of the main reasons lies in the high amount of administration involved in the process, from completing employee appraisal forms, to arranging performance meetings, calculating performance scores, and manually gathering feedback. Many of these tasks have traditionally been performed manually, taking up precious human resources (HR) man-hours.

Automating some of these key procedures has the potential to offer clear and measurable benefits to the process. Employee evaluation feedback can be requested and collated within the system, saving line managers’ time doing this manually. Employee evaluation form templates can be set up so that performance data, feedback, and scores can be gathered in one central place, in a consistent format that is easy to assess and straightforward to all relevant parties. Further, technologically advanced reporting functionality can offer insights into the performance levels across the entire organization, at the touch of a button.

How can carrying out performance evaluations benefit employers?

We’ve already pointed out the fact that good employee performance has a discernible benefit on business performance.

Here are some of the main ways:

1. Improves employee motivation and discretionary effort

Employees who receive regular feedback and performance discussions from their line manager generally feel invested in, cared about and, as a result, are more motivated to work harder and with positivity. This creates obvious advantages for operational productivity.

2. Reduces employee turnover rates

If employees have performance reviews, development plans, and clear performance objectives to work toward, they often choose to stay longer with an organization, as they can see a potential career path for the future.

3. Makes it easier to recruit the best

The best talent often want to work for an organization that strives to be successful and gives its employees the tools and support that they need to perform at the highest level. Don’t be surprised if good quality candidates ask about the performance evaluation process of the business during an interview. This is a great sign that they are looking for an employer who encourages great performance.

Important metrics to measure employee performance

Measuring and evaluating employee performance depends on a number of factors. The individual’s job role, seniority level, and previous skills and experience should be factored in, as well as organizational factors such as the industry type and company culture. That said, several key metrics can be useful within the performance evaluation process.

Using quantitative data, such as the percentage of achievement against numerical goals like sales revenue, can be extremely useful as a snapshot of employee performance, being easy to measure and evaluate. That said, it is important to recognize that sometimes a story lies behind the numbers. Sometimes it is necessary to dig a little deeper to establish the circumstances and ensure that you are reviewing performance in the correct context.

Qualitative data is much more subjective than quantitative and, as a result, employee evaluation goals can be more difficult both to set and measure. However, qualitative performance data holds an equally important place in the new employee evaluation picture, sometimes offering deeper and more detailed insights into an employee’s true performance and skills.

Using a mixture of both quantitative and qualitative information is vital when reviewing performance and the key point is to use feedback, examples, and data to back up opinions on performance objectively.

Characteristics of the ideal performance evaluation system​

There is a lot of choice on the market for performance evaluation systems and, if you are just starting out in the area, it can be hard to know which features and functionalities on which to focus. The best performance management systems should offer their users the following built-in components:·

1. Recording details of past performance

This allows managers and employees to list achievements and successes within their role, as well as how they have performed against their role profile and set objectives for the year.

2. Feedback mechanisms

A good performance management system will include a section for capturing 360-degree feedback on an employee’s performance.

3. Personal performance objectives for the future

Employees and their managers will set SMART goals for the coming year, along with agreed actions on how to achieve them.

4. Ratings and scores

Managers will be able to assign ratings to their team’s performance and a good performance management system will allow the business to customize these options to fit in with their existing performance scoring process.

5. Development plans

This part of a performance management system allows employees and managers to detail the desires and expectations relating to what they should work toward and achieve in the future. In addition, it captures any associated information about potential future training needs, promotional opportunities, etc.

Key questions to ask during the performance evaluation process

Carrying out effective and meaningful performance evaluations can be challenging for line managers. Giving praise may not come naturally to them. They may feel nervous about giving poor or constructive feedback, not to mention all of the work involved in gathering and collating performance evidence and feedback, scoring employee performance, thinking up personal objectives, etc.

While there is no substitute for thorough training in performance evaluations, here are some key questions that line managers should ask during the performance evaluation process to ensure that it has maximum benefit for both their team and the wider organization.

1. What has my team member accomplished this year?

Take time throughout the year to log specific examples of when they went above and beyond in their role.

2. What knowledge gaps does my team member have?

Everybody has areas where their skills or experience is lacking slightly. Make sure that you can back these gaps up with specific examples and focus on how to fill these knowledge gaps in the future.

3. What are the top three areas of improvement I would like to see my team member make?

In addition to skills or knowledge gaps, it’s likely that your team member will also have particular areas of their performance that are weaker than others, or even areas where their performance is below standard.

4. What goals should we set for the future?

This part of a performance review is key as it looks forward and not backward, identifying opportunities for improved future performance in the employee’s job role.

5. What sources should I gather meaningful performance feedback from?

This 360-degree feedback can be a really useful tool, with the aim of gathering feedback, not just from the line manager but from colleagues, external stakeholders/clients, and direct reports, where relevant, too. This all helps to give a more well-rounded and balanced view of the team member’s performance.

6. Where do I see my team member in 1/5/10 years from now, and where do they see themselves?

This is an important question as it will help you to understand the goals and ambitions of your employees and what drives them, so that you can offer or suggest interventions that suit the overall direction of their career.

7. What training or coaching opportunities would benefit my team member?

It’s key to target training courses to specific areas of an employee’s performance that you want to improve or build upon for the future, rather than arranging blanket training courses for all employees that don’t address their specific needs.

Harness the power of the performance evaluation in your organization

Trying to improve the efficiency of your organization without a robust performance evaluation system for employees in place is doomed to failure. It’s worth investing time in creating and maintaining a clear and meaningful performance system in your business to support and motivate employees to be the best they can be.

Technology can help enormously to automate and manage the inevitable administration that comes alongside this process and the Kissflow HR Cloud offers a free demo so that you can see just how easy the performance evaluation process can be.