Performance Evaluation – A Guideline for Achieving Organizational Goals

We are fast approaching the end of another interesting and challenging financial year. The buzzwords in most organizations would soon be ‘Met expectations’ and ‘Needs improvement’. The atmosphere in some workplaces is reminiscent of school days when children return to their seats to collect their notes or report cards, some elated and others downcast. However, the tension in the air during grading season lingers for a longer period than what we experience with report cards in our school days. The entire process can be extremely stressful for all parties involved. A better understanding of the purpose, processes, and key elements of a performance appraisal would make the experience worthwhile and less stressful.

What is Performance Evaluation?

It is a formal and structured evaluation method to elucidate the performance of an individual or a group/team and the potential for development.

Objectives of Performance Evaluation:

There could be a plethora of objectives to conduct a performance appraisal based on the difference in job profile, employee profile, organizational goals, etc. The following are the most common goals for conducting a performance appraisal.

• Employee Confirmations – The idea is to assess employee performance against expectations set while the individual joined; and to find out if you are ready to be confirmed as a permanent employee.
• Employee Promotions and Compensation – Here employee evaluation gives a clear picture of whether the individual is ready to take on more responsibility and links performance to percentage increase in compensation.
• Need for training and development: Performance reviews and performance dialogues identify those areas that need improvement in an individual/group and suggest action plans to address these gaps through training and development.
• Employee Feedback and Complaints: The appraisal is also used as a platform to understand the factors that contributed to the deviation from expected performance and to understand the support the employee needs to meet future expectations.

The following table gives a simplistic view of the objectives of the Performance Evaluation:

individual understanding
Performance Feedback
Identification of areas for improvement
Identify areas of strength
Better understanding of future expectations.
Organizational understanding
Salary review
Evaluation of HR systems
Retention/confirmation/termination/promotions
Identify the gaps that hinder the achievement of business objectives
Documentation

The performance evaluation process

Step 1 – Objective definition of appraisal

Have a clear understanding of what the Performance Review will accomplish

Step 2 – Set job expectations

Be clear about what is expected both qualitatively and quantitatively from the work entrusted.

Step 3 – Design of the evaluation program

Create a plan for when, where, and how the evaluation will take place. This includes the tools to be used. Even 360-degree feedback and 360-degree performance reviews are used

Step 4 – Assess

Information collected about performance is now evaluated against established job expectations.

Step 5 – performance dialog

This step involves meaningful conversations that both the evaluator and evaluator have to understand the evaluation and discuss action plans.

Step 6 – Final data for action

In this step, the results of the evaluation are documented for further action.

The key to the success of any performance appraisal lies in the quality of the performance dialogue. The performance dialogue determines the future relationship of the employees/team with management. This is critical for individuals/teams to be motivated to achieve business goals for the next financial year.

Some current methods of performance evaluation

1. Evaluation Centers: This is a performance appraisal method that was first developed and used in 1943 in countries like the US and the UK. The goal of this method is to place employees in simulated environments that require employees to display behaviors and patterns typical of a work environment in order to measure employee performance. Trained raters observe these displayed behaviors and rate them on established parameters. The results drawn from these observations and analyzes help management decide on an employee’s readiness to take on new tasks, increased responsibility, and also the areas for improvement that need to be addressed while doing so.
2. 360 degree feedback: It is a method in which all interested parties such as manager, peer, customer, subordinate, other departmental staff including oneself give feedback on the performance of an individual. This technique gives a broader perspective to the individual’s development plan and allows them a 360-degree performance review. Some of the areas that can be assessed through this technique are interpersonal skills, customer service skills, meeting deadlines, etc.

“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality” – harold s geneen

All managers would serve their organization well if they understood that the essence of performance reviews is not to intimidate an employee but to mutually agree on what needs to be done to achieve business goals. This is also something that performance appraisal training should focus on.