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Most companies conduct employee performance evaluations on a periodic basis and their HR department is generally responsible for managing this process.
A well-designed performance evaluation system is indeed necessary for fair and meaningful assessments. The performance evaluation system can focus on many areas concerning the employee, besides their contributions and development needs.
When evaluating employee performance, organizations may use one of the following approaches.
- ● A letter-based grading system such as A, B, C, D, or F
- ● A percentage-based or weighted grading method (for example, 60%, 77%, or 93%)
- ● A numerical rating scale, which may range from 1–5, 1–10, or even 1–100
In this article, we will discuss how HR Managers can create an effective Performance Evaluation system with different performance evaluation examples. We will also discover different evaluation methods that add true value to the organization.
Objectives of Employee Performance Evaluation System
Some of the common reasons are
- ● Salary increments: Commonly believed to be the only purpose from an employee perspective, and typically the least important from the management perspective
- ● Goal achievements and related bonuses/commissions
- ● Promotions and transfers
- ● Succession planning
- ● Identification of top performers and non-performers
- ● Identifying competencies gaps for training management
- ● Confirmation of probationers
- ● Improved manager and employee communication
- ● Legal compliance and risk mitigation
Performance Evaluation Methods
1. Management by Objective
This approach focuses on jointly defining clear, measurable objectives and regularly reviewing progress, thus ensuring transparency and alignment.
Performance discussions are directly linked to mutually agreed goals, with the flexibility to revise objectives as business needs evolve.
2. Objective and Key Results
OKRs focus on long term goals rather than short-term targets. Objectives set these big goals, while key results measure progress toward those goals.
3. 360-degree Feedback
The 360-degree feedback method evaluates performance by collecting confidential feedback from managers, peers, and direct reports, thus offering a well-rounded view of an employee’s effectiveness. It minimizes bias and identifies strengths or improvement areas.
👉 Read the case study on how Empxtrack Automates 360 Degree Feedback Process for MMR Research Associates.
4. Checklist Method
This performance evaluation method relies on predefined checklists to assess employees against specific metrics and expectations. It generally includes developmental checklists as well as event-based checklists.
5. Behaviorally Anchored Rating Scale
This method evaluates performance by using clearly defined examples of effective and ineffective behaviors for each performance area. It is known as Behaviorally Anchored Rating Scales (BARS). It emphasizes how results are achieved by linking observable behaviors to measurable rating scales, thereby reducing subjectivity in evaluations.
👉 Read the case study on how Empxtrack Performance Management System met the unique Customization & Integration needs of Southern College of Optometry.
6. Self Assessment
Here, employees review and rate their own performance. It helps employees take responsibility for their growth and highlights differences between how employees and managers rate them. However, it is advisable to use managers’ ratings along with employee’s self assessment.
Process of Conducting the Performance Evaluation
It is important to define the different steps in the process. The same process may not fit all situations.
For instance, succession planning, promotions and transfers will typically involve heads of departments and senior level managers in the decision cycle. Whereas salary Increments, goal setting and tracking, confirmation of probationers & competency gap analysis may require participation of line managers and 2nd level managers.
In cases where only white-collar employees are being appraised, you may like to involve appraisees at the start of the process by including a self evaluation and an acceptance at the end of the process. In evaluations for blue-collared employees, the employees may be involved only at the end.
Similarly, in a hierarchical organization the workflow and relationships will need to be defined well to begin with (especially for special cases such as heads of departments, general managers, etc.), and in a Matrix organization, the focus may be on peer, senior and subordinate reviews.
Communicate Repeatedly About Objectives
Structured and timely communication can help everyone appreciate the performance appraisal methods and encourage transparency and objectivity.
The different ways in which communication can be carried out include
- Publish on the employee portal the start of the appraisals, the process details, and key timelines.
- Printing some posters and display them at strategic locations.
- Details of your employee performance evaluation process in the employee handbook.
- Workshops for employees and managers Introduction form that communicates the performance evaluation process from each stakeholder’s perspective.
- If you normalize employee scores, include that in all communications so that employees and managers are aware that final scores may be changed.
- If possible, involve senior management in talking about the importance of the appraisal process and its timely completion.
Collect Performance Data from Multiple Sources
Conduct 360-degree feedback for the employee to manage the complex multi-source feedback and complete its analysis.
In addition, this strategy will help eliminate bias in performance reviews while providing a clear and accurate picture of an employee’s abilities.
Measure the Actual Performance with the Desired Performance
After collecting feedback from different stakeholders, measure the performance of the employees. This is the most challenging stage of the performance appraisal process.
It requires consistent monitoring throughout the year rather than a one-time review. It also involves using appropriate methods, minimizing personal bias, and supporting employees in their work without unnecessary interference.
Discuss the Results
Discuss the appraisal outcomes through individual discussions. These conversations emphasize open dialogue and collaborative problem-solving rather than criticism.
Timely Completion of Appraisals is a Must
Each step in the performance evaluation should take no longer than 4 to 5 business days.
STEPS in Performance Evaluation
PROPOSED TIMELINES (business days)
- ● Employee completing their self-evaluation and submitting to their managers: 2 days
- ● Managers completing the employee evaluation and submitting it to the next level: 5 to 10 days (depending on the team size)
- ● Heads of departments finalizing employee scores for their departments and releasing it to HR: 2 to 5 days
- ● HR conducting normalization (removal of manager bias) across the organization, finalizing scores and submitting evaluations for discussions: 3 to 12 days (depends on the level of interaction required)
- ● Managers discussing appraisals with employees and submitting for their final acceptance: 2 to 5 days (depending on the team size)
- ● Employees accepting their appraisal and signing off: 1 day
- ● Total Time Taken: 15 to 35 days
To meet timelines, HR should constantly get a status check on the process and send reminders when needed. Don’t hesitate to involve senior managers if delays persist.
Does Access to An Archived Performance Evaluation Record Help?
Managers and employees set future achievement plans based on past discussions, but without access to these records, evaluations lose objectivity and continuity across years.
How can the HR department help in this?
HR should introduce a process of goal setting where employees and managers define the goals at the beginning of the year and submit them to HR after finalization. Secondly, HR should provide access to past appraisals and goal achievements of employees to the managers.
Integration of Employee Evaluation with Other Data is Important
In most organizations, appraisals focus mainly on goals and skills, but are these the only factors managers should evaluate, or should intangibles also be considered, such as
- Number of rewards/ recognitions
- Involvement in a disciplinary case and violation of safety norms
- Timeliness of employee (How many times was the employee late, how many times did the employee take leave without permission from the manager, etc.)
- Type & duration of training attended
- Employee counseling records
- Participation in external events that got the company some recognition
- Publications/ contributions to professional journals
- Opinions of other employees and seniors, especially for employees in leadership roles
- Length of service and other employee-related data, especially past experience & qualifications
- Employee achievements note with review by the manager & seniors
Most managers rate employees on their recent performance. So, linking multiple data points helps ensure fair and accurate evaluations.
Performance Evaluation System As An Enabler
The biggest challenge is the time consuming task of collecting and managing large volume of data.
Availability of online help, for example, rating details that appear during competency evaluation, helps managers complete appraisal faster. While technology helps in easy tracking of goal achievements and completion.
Hence, an integrated HR platform can help in quickly meeting the objectives of the Performance Evaluation Process with minimum additional effort.
The ready-to-use Empxtrack Performance Management tool with multiple customization and configuration options can save significant time for both HR and the line managers.
Empxtrack is an integrated HR and performance evaluation software that combines all aspects of the employee life cycle. With this HR platform, you can implement an effective and holistic performance evaluation process in your organization. For any queries, feel free to contact us with details of your requirements.
Frequently Asked Questions
Q1. | What is employee performance evaluation? |
| Ans. | An employee performance evaluation is a formal and systematic process used to assess an employee’s job performance over a specific period. It is conducted by managers or supervisors to review achievements and identify areas for improvement. |
Q2. | Why is employee performance evaluation important? |
| Ans. | It is important because it provides a structured and objective approach to assessing employee contributions, development, and overall effectiveness within an organization. It further enables constructive feedback, goal alignment, and accountability while helping identify strengths, address weaknesses, and determine training and development needs. Furthermore, it supports fair recognition and rewards, and enhance communication between employees and managers. It also aids in succession planning. |
Q3. | What are the common problems in employee performance evaluations? |
| Ans. | Some of the common problems include managerial bias, unclear goals, and infrequent feedback. Adding to this is excessive focus on a single weakness of the employee or their attitude, and evaluating them on subjective assumptions. Further, lack of follow-through and absence of next-step goals reduce the effectiveness of the evaluation process. |
Q4. | What is the right performance appraisal process? |
| Ans. | The right performance appraisal process begins with establishing clear and measurable goals and communicating them to employees and evaluators. The performance is then continuously monitored and measured using objective methods, followed by a comparison between expected and actual outcomes to identify gaps or achievements. Finally, the results are discussed through constructive, one-on-one feedback focused on improvement, motivation, and problem-solving to enhance future performance. |
Q5. | What are some examples of employee performance evaluation methods? |
| Ans. | Some of the performance evaluation methods are: Management by objectives Objective and key results 360-degree feedback Checklist method Behaviorally anchored rating scale Self assessment |
Q6. | How often should employee performance evaluations be conducted? |
| Ans. | Ideally, they should be conducted quarterly or semiannually. This is because more frequently held evaluations enable early identification of performance gaps and support continuous improvement and employee development. |
Q7. | How Empxtrack help in employee performance evaluation? |
| Ans. | Empxtrack helps streamline employee performance evaluation by providing a fully customizable, user-friendly platform. It allows organizations to set up personalized appraisal forms, rating scales, workflows, and competency libraries, while supporting 360-degree feedback and continuous check-ins. The software offers real-time analytics, historical performance data, and actionable insights to identify strengths, skill gaps, and high-potential employees. Empxtrack ensures fair, consistent, and effective performance evaluations by facilitating transparent feedback, goal tracking, and development planning that drive employee growth and organizational productivity. Moreover, the platform also offers 5 free evaluations to better explore and understand its functionality. |
Thanks for sharing this blog. In an employee performance review, managers evaluate that individual’s overall performance, identify their strengths and weaknesses, offer feedback, and help them set goals. Employees typically have the opportunity to ask questions and share feedback with their manager as well.
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I agree with the views expressed by Milan. But it is also a requirement that the initiatives taken by an employee are appreciated, weighed and rewarded. And if the direction is wrong, then the employee has to be guided provided his intentions are positive for the Organisation. For this you need a transparent evaluation system – May call it Performance Review, Performance Feed Back, Annual Mentoring Session, Annual Appreciation System …….. Anand
In your opinion, what are the challenges from employee end related to performance appraisal that an HR can face ?
Hi Vikash,
Regarding the challenges from employee end related to performance appraisal, some of the immediate thoughts that come to my mind are as follows. Firstly a performance appraisal system may not include extensive and ongoing feedback that an employee can use to improve his overall performance. Employees may want to give their feedback to HR, “in confidence”, or may even wish to reject their appraisal – indicating a conflict situation. Secondly if goals are not clearly defined, many employees may feel disappointed and may not be able to perform as per the expectation.
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plz tushar will u suggest me any recent topic for my synopsis in PhD HR
Hi Isha,
Let us discuss next week about how we can help you in your PhD synopsis.
P/s thanks for you comments
Regards
Tushar
i think performance appraisal is much required for improving skills of employeesss.. u mentioned very good points here.
Thanks Tushara,
You have made a great contribution to the HR society as a whole and to me in particular, as I have found some information, which I have been looking for.
I have often found that the toughest part is to take people in to confidence about the purpose of performance appraisal, as companies do not pay much attention to salary increment / promotion part in connection with the PA Review report of the employees. This results to a non-bothered attitude in at least some of the employees.
I am of the opinion that earning/losing part should be more concerned with the result of a accurately conducted Performance Appraisal Report.
Thanks,
Shafi.K.P
HR & Administration Manager
Palm International LLC,
Dubai, UAE.
Thanks for your appreciation Shafi.
Tushar
Employee involvement: a key to performance appraisal systems worldwide. It’s amazing that such dinosaurs (performance review systems, not the people) are still around. They must be, however, since a book has been published called “Get Rid of Performance Reviews’. Yet despite the outcry against reviews, there’s nothing wrong with them that can’t be fixed by getting managers off of center stage. Top management can fix the basic problems the review system faces.
Critics argue that performance reviews not only don’t accomplish what they’re supposed to do – that is, improve performance, enhance employee skills and achieve planned outcomes – they have unintended negative consequences. In many cases, unfortunately, that’s true. But it doesn’t have to be that way. What companies need to abolish is not performance review itself, but the idea that it’s a “management tool. Here are some practiced paradigms that must be discarded:
Performance Review is designed, as the name suggests, in support of managers. If you believe this, your management is one of the roadblocks to exceptional performance. The most useful performance review support work relationships between employees (managers too are employees). Both parties need to address the question of how to best serve the goals and outcomes and align their work efforts.
Performance review is a management tool. Managers are not necessarily the best qualified to assess their staff’s accomplishments. In fact, they may have a very limited or biased view. A more complete and accurate picture results when employees and managers seek feedback from a variety of customers, team leaders, professional peers, and others inside or from outside the unit.
Performance reviews include judgments from a “higher authority”. Judgments produce compliant workers – people who are told what to do – not innovative ones. People hate performance reviews because most of them are fault-finding. How much better to ask, “What did we learn from this? What can we each do different the next time?”
The manager is responsible for obtaining input from the employees. 21st century employees can’t assume a passive role in performance review, providing “tough-minded” self-assessments and valuable insights only on request. They must take the initiative, soliciting feedback from their managers and others. No risk taking to solicit the complete picture and no learning means no improvements.
Managers should be trained in performance reviews, then prepare their employees for the process. If performance review is to be a productive partnership with employees taking the active role and both parties committed to exchanging knowledge and ideas, managers and employee need to be trained together.
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Business without strategy make it hard for employees to set work objectives.
There are different approaches to setting leadership behavior goals, in addition.
Goals leading nowhere + different approaches to leadership goals endanger of business productivity + measurement of accomplishments respectively.
That’s true that line managers can be involved in the compensation process too, however, having so extensive process requires a strong HR leadership at top. Unfortunately, HR still holds back seat in small, medium and medium large companies. how can hr escalate to strategic role?
Great Job explaining the complete appraisal management process. I am sure HR community will be greatly benefited by this.
However, the real challenge lies in getting consensus of employees on appraisal process and the end result of the appraisal – i.e. compensation or promotions.
Whatever amount of efforts companies put in maintaining secrecy of the salaries, employees always come to know the compensation plans of their peers. This gives them basis for comparison.
Consider a situation, where an employee get good scores in appraisal, but his/her increment is lower than the ones who get low scores; and if this person come to know?? They are sure to start looking out.
One solutions to this is by maintaining the grades across the company so there is no need to maintain confidentiality. However, the differentiation in the salaries can be done by increasing the loyalty components, age factors etc.
Thank you Gireesh for your comments.
As discussed above, the appraisal objective would decide the process and this needs to be communicated to the stakeholders at the start.
The salary increments may depend on other factors too such as normalization, compa ratio, goal achievements besides soft parameters such as length of service, criticality of employe etc.
If line managers are involved in increment finalization then they may be in a better position to discuss the same with their teams and there may be higher acceptance.
EmpXtrack Compensation Planning module at https://empxtrack.com/performance-management-system/pay-for-performance allows managers to be involved in the process