PrincePerelson & Associates

Performance Evaluations: How Companies Benefit

Regular employee performance evaluations are an essential tool business leaders use to measure employee job performance. It allows them to determine if an employee is performing well in their position. Additionally, it provides an opportunity for employees to understand expectations and make adjustments to improve their work. When conducted regularly and in a standardized, evidence-based format, meeting one-on-one with employees can be beneficial for an employer, as it is one of the best ways to encourage and increase employee productivity.

The Benefits

Performance evaluations allow employers to assess many aspects of an employee’s contributions to the organization, including the work they produce, their problem-solving skills, and their knowledge and skills. This information can guide changes to assignments, training, and team goals. The benefits realized by companies that hold semi-annual or annual employee evaluations fall into five main categories.

1. Understanding Your Organization

Knowing what you can expect to accomplish in the next year depends greatly on the abilities of your employees. Taking the time to discover their strengths and weaknesses can reveal knowledge and skills gaps. As you evaluate employees, be specific. Rating employees on a numerical scale in various important areas, such as leadership, reliability, communication, problem-solving, and initiative, will quantify abilities and let you track and monitor progress.

Filling gaps identified through employee evaluations may inform recruiting and hiring decisions as you seek to strengthen your team. A professional job recruiter can help you find the ideal candidate to fill your team’s skill or knowledge gaps. Determining the best person to perform tasks and lead projects can also come from knowing where each employee excels.

2. Enhancing Skills

Employee performance reviews are an opportunity to evaluate whether employees can complete the responsibilities associated with their job. Before meeting with an employee, consider the following questions:

  • What are the employee’s duties and responsibilities?
  • What skills and abilities are essential to be successful in the role?
  • Does the employee have the necessary skills?
  • Are they proficient and up-to-date?

Through evaluating your employees, you can discover training or development needs among team members. Consider offering training in key areas that will enhance the ability of your employees to solve problems and innovate solutions.

3. Communicating Expectations

If an employee is falling short of your expectations, a performance review is an opportune time to communicate or reiterate what you want to see from them. Employees will struggle to meet unclear or unspoken expectations.

As you review your assessment of their performance, explain why they received the ratings they did in each category and what they can do to improve. Be sure to allow opportunities for employees to ask questions and be open to providing access to training or other resources that can help them rise to the occasion.

4. Rewarding Accomplishments

Ratings on performance reviews are a physical record of each employee’s track record with the company. Are they showing consistent effort and improvement? Performance reviews are the perfect time to express your sincere appreciation for outstanding employees, as well as those who consistently put forth their best effort. Many employers use this time to reward those that stand out above the rest with a salary increase, a bonus, or stock options.

In addition to an employee’s performance on the job, pay increases should take into account special skills or abilities that they bring to the organization, the market rate for similar positions, and the company’s budget. Inadequate compensation can lead to high employee turnover, costing you your top performers. Compensation should be competitive while still leaving room in the budget for other necessary expenses.

Employees that consistently outshine their peers in performance reviews may also be able to take on additional responsibilities in preparation for a promotion to a leadership position.

5. Managing Resources

Every business has a finite amount of resources to devote to achieving company goals. While launching a new product or service may sound exciting, your employee performance reviews may reveal that you should spend your budget on training for your employees instead. Equipping your employees with new skills and abilities prepares them to accept new assignments and overcome the challenges associated with growing your business.

Your employees are your most valuable resource. Investing in them and their future is an investment in your company’s future.

Tread Lightly

Quantifying your employees’ abilities will never capture each individual’s full potential, and talking to people about their weaknesses is a delicate conversation. Constructive criticism delivered in the wrong way can be counterproductive, leaving employees feeling frustrated and unappreciated. Here are a few tips for making the most of your performance reviews.

  • Strive to keep the tone positive. Most employees are striving to do their best but will accept some guidance and direction if they believe you have their best interest at heart. Be sure to acknowledge their strengths and contributions.
  • Allow reviews to be a two-way conversation. Allowing time for employees to respond and give feedback can enlighten you about underlying issues or resources that stand in the way of their success.
  • Be willing to offer support where necessary. Listen to the needs of each individual and be aware of how you might help them to reach their goals.

Performance evaluations can feel like reviewing a lousy report card with your employee if done incorrectly. However, when done in the spirit of working together to learn and grow the company, regular employee performance evaluations are an excellent way for employees and employers to discuss recent accomplishments and struggles in the workplace. The information gleaned from these meetings can help business owners determine how best to lead their company toward meeting goals and achieving their vision for the future.