Your employees show up at work daily, but are they contributing correctly?
In the data-driven business culture, everyone is tracking the growth metrics and evaluating the effectiveness of efforts. But before moving to the overall company performance, you must assess the employees’ work and employee’s performance as it is the base of excellent outputs.
Performance evaluations are vital for organizations to keep track of goals and achievements. In addition, employees’ performance evaluations boost productivity at the workplace. So, performance assessments enhance the overall business success and improve the quality of outcomes.
Top Methods to Assess Employees’ Performances
By assessing the employees’ performances, you can see if the business model is on the right track. Usually, Companies provide monetary benefits to employees that are accomplishing targets. As said earlier, evaluating staff performance can boost their productivity to a great extent. Recognizing their efforts and compensating them accordingly can bring you exceptional results. Therefore, the appraisal letter should discuss the employee’s achievements, work dedication, and their revised compensation.
However, the primary question is how to evaluate the performance and determine the compensation. Therefore, we have listed some efficient methods to help you assess employee performance and set appraisal standards.
Management by Objectives
This is one of the oldest and most efficient performance evaluation methods. The management and staff identify, plan, organize, and communicate aobjectives and review them at specific intervals. They periodically talk about the progress of goals and future strategies.
Here is an example of MBO:
A company sets a quarterly goal to earn 30% of MRR from marketing efforts. To achieve this, they break down the goals into different sets for teams and individuals.
- Team members are responsible for attracting high-quality prospects and closing at least three deals in the quarter.
- Managers observe each member’s plan to meet the target and guide them whenever necessary.
Critical Incident Method
This method is best for measuring employees’ performance and behavior, which can change the outcomes. Managers note instances where a particular member’s behavior changed the result of an event. They classify the observations into different categories, such as teamwork, punctuality, work dedication, etc. Then, they gather feedback from other members and discuss all the things in annual or quarterly appraisal cycles.
This example can help you understand the critical incident method in a better way:
A business development executive sacrificed his lunch break due to a busy work schedule, and his colleague didn’t even answer the manager’s call thrice.
- This shows the first employee’s commitment to his duties and business. Therefore, the manager would record that.
- In 1:1 discussions or appraisal cycles, the manager might promote him to a senior-level position or increase his compensation.
360-Degree Evaluation
This one is also a prominent method of employee performance evaluation. In this method, the employee gets anonymous feedback from 4 different parties: Self-evaluation, managers, peers, and subordinates. The 360-degree feedback surveys help the staff members identify their drawbacks and improve themselves.
Here is an example of how 360-degree evaluation works:
An employee might complete a challenging assignment effectively or might miss an important work deadline. In these scenarios, managers need to conduct a 360-degree evaluation.
- The manager will define the purpose behind the review and explain the rating criteria. He will decide who will assess the person and provide feedback.
- He will set a timeline for submitting feedback and send the responses to the employee for self-evaluation and improvement.
Cost Accounting Method
The cost accounting method is probably the most efficient in evaluating employee performance. It outlines the monetary benefits he yields to the organization. The assessment is done by comparing the cost of retaining an employee and the financial benefits the company receives from him. It highlights the profit ratio of the company from each individual.
Let’s go through an example to understand in deep:
The example of the cost accounting evaluation method is quite simple. A salesperson’s assessment would be done on the costs incurred by him, and the revenue he generates would be the result. The manager will define a particular month or period for the assessment.
- The manager calculates a sum of all the costs incurred on particular employees, such as company resources, salary, incentives, and other monetary perks provided to him.
- Against these expenses, he calculates the income he brings to the business during that specific period.
Checklist Method
This is another method that helps to evaluate employee performance based on behavioral data. The critical incident method was based on real-time situations. In contrast, the checklist employee evaluation method is based on imaginative instances to check how the employee will behave during specific circumstances. The attendants are provided with a set of questions, and the reviewers can select how much they agree with the answers.
You will get a clear idea about this method by going through the following example:
The HR manager will prepare a questionnaire for each employee, including yes/no, statements or multiple-choice questions. He will define the criteria of evaluation for each individual. If the checklist is created for the team lead/senior executive, then it must analyze his management and coordination abilities.
- HR will prepare different questions to measure the skills of a manager, such as critical thinking, patience, self-motivation, etc. He will give specific weightage to each question.
- HR analyzes the data and prepares a report. The team members review the answers and give their opinions.
Ending Notes
Evaluating and recognizing staff’s performances boosts their job satisfaction. And delighted and satisfied employees are essential for the business. Employee performance evaluation can help you know your workforce personally and better. You can give them feedback on how they are doing in their job and how they can improve their skills. This way, you can also boost your business productivity.
The employee performance evaluation methods above are not perfect, but reliable. They will help you boost employee morale at the workplace and ensure high-quality results. However, the criteria and the evaluation method may vary based on your industry and job role. So, study all these methods thoroughly and determine which works best for your organization.
