Formal determination of an individual’s job-related actions and their outcomes within a particular position or setting. In financial trading, its objective is to assess the extent to which the individual added wealth to the firm and/or its clients, and whether his or her achievement was above or below or industry norms. also called performance. Performance appraisal is the procuring, analyzing and documenting of facts and information about an employee’s net worth to the organization. It aims at measuring and constantly improving the employee’s present performance and tapping on the future potential. “Performance appraisal is the systematic description of an employee’s job relevant strengths and weaknesses.” by Sir Wayne Cascio According to top family business expert Don Schwerzler, “Having a performance evaluation system in place to measure and monitor how well the business (managers and associates) is doing in meeting “mission critical” benchmarks is a basic building block for every successful family business.”
The uses of performance evaluation in the organization are outlined below. Performance evaluation is the continuous assessment of the employee to asertain his/her performance in comparison with the set standards.
Uses of performance evaluation;
To find out the strengths and weaknesses of the employee and inform him.
To motivate weak employees
To align performance with organization’s strategies.
To identify personnel for promotion and transfer
To identify criteria for compensation and benefits according to the usefulness of the employee to the organization.
To help in succession planning
For employees and management to meet and discuss objectives
To identify problems preventing the employee performing well.
To identify training needs.
• The over-riding goal of the performance evaluation process is to improve performance. This includes the employee’s personal performance, the department’s performance and, ultimately, the company’s performance. It is often said that a chain is only as strong as its weakest link (or a wall as strong as its weakest brick, etc). By evaluating each employee regularly, a company can find and improve areas of weakness that may affect overall company performance.
Identify Strengths and Areas of Improvement
• A performance evaluation often contains a multiple-choice rating section in which the supervisor ranks the employee on specific job functions. This method of breaking down each job function allows the supervisor and the employee to analyze where the employee is succeeding and where he is failing. This information can be used to set goals for the next period and may also be used to determine training needs. It may also be used to reassign responsibilities in a group setting. For example, if each worker sometimes takes customer service calls and sometimes processes paperwork, the supervisor may want to use the strongest call-takers to take the majority of the calls and the strongest paperwork processors to handle most of the paperwork.
• An employee cannot improve his performance unless he knows what is expected of him. While initial expectations are often set upon hire, expectations may change from time to time and often become increasingly advanced as the employee’s length of employment increases. The personnel evaluation process is traditionally used not only to review performance against past expectations but to set expectations for the upcoming review period. Expectations should be clear, focused and measurable.
Increase Employee Morale
• Though often overlooked, this aspect of the performance evaluation process is important. Confident employees who believe their work is valuable and appreciated are less likely to seek employment elsewhere. Because turnover is both expensive and deteriorates consistency, retaining high-performing employees is a wise fiscal and operational strategy for any company. Satisfied employees are also company ambassadors: they are less likely to participate in negative discussions with other employees, may help recruit new, high-performing employees for other positions and portray a positive image of the company that may even lead to new business.
Determine Job Suitability
• Performance evaluations are often used to determine an individual’s suitability for the job he is paid to perform. Consistent high performance often justifies a pay rate increase or even a promotion. Consistent low performance may indicate a need to demote or terminate the employee. As a third, and sometimes overlooked angle, performance reviews may indicate that while the employee is not suited for the position he is currently filling, he would be ideal for another open position within the company.
What Are The Key Elements of an Effective PE System?
• Clearly defined performance standards
• An effective monitoring system
• Regular discussions of performance
• Development of appropriate action plans as a consequence of the appraisal
• knows why their job is important – to the customers, the company and their boss • sense of purpose – they know what they have to do and how to do it; they can work more independently
• less time fighting fires
• less stress
• more time to plan and manage
• improved morale, less friction, improved productivity… • improved profitability
Employee performance appraisals are only a part of the whole process, but very often it comes down to filling out a form and “laying it on” the employee at an annual meeting or sticking it in the mail box!
If your family business is not performing well – not maximizing the full potential of the business, an “operational assessment” could make a significant difference in growth and profitability Southern Business Research
Performance appraisals benefit your career by:
• Clearly outlining the goals, objectives and expectations of your position. • Grading on a numeric scale or graduated levels to monitor improvement. • Ensuring employees are evaluated on equal criteria for the same job. • Allowing personal input as to the direction of your professional growth. • Eliminating many subjective type comments and focusing on objective facts. • Establishing a level of competence for both the individual employee and the workplace as a whole. • Provides a written record of levels of performance.
• Can be used for promotions, awards and other incentives.
• The biggest concern with performance appraisals is that employees tend to work to the appraisal, and are not always motivated to do new or creative things. Depending on the type of employment this can be positive or negative. It would be very negative if a computer tech tried a new and creative way to network a system that might leave the company without Internet for a week, whereas a salesperson may have an excellent result with a non-standard approach to sales.
• There are occasions when a negative performance appraisal may be unfounded. Most agencies offer some type or appeal or review if there is disagreement between management and employees on a performance review. This usually involves a third party reviewing the information and interviewing the supervisor and the employee.
• Sometimes the issue concerns the fact that it is a new position in the company and the evaluation does not fit the job, or that the employee is new to the position and is on a steep learning curve. Either one of these situations can be addressed by creating a new evaluation standard or completing another performance appraisal in a few months.
• A negative performance appraisal is not necessarily detrimental to your career, what is important is what follows. If you know that you have a bad report but it was immediately followed by a positive performance assessment be prepared to highlight this and focus on the changes that occurred.
• Talk to employers and managers to improve your performance appraisals and keep striving for excellence. Use performance appraisals to evaluate and reflect upon your current level of performance and on developing a strong professional growth plan for the future.
Common Practices in Performance Evaluations
• Prior to beginning the evaluation process, the evaluator should meet with the employee who is going to be evaluated and introduce himself as well as explain the evaluation process. If employers fail to offer a pre-evaluation meeting, they create an adversarial relationship in which the employee and the evaluator are not working cooperatively toward the same goal, but instead at odds with each other.
• Evaluators should always make expectations clear to employees being evaluated. If employees are unaware of what is expected of them, they will be unable to meet these expectations. This explanation of expectations can be made in the pre-evaluation meeting or via writing through email or another means of communication.
• To ensure that evaluations are fair, a rubric should always be used. Scoring tools listing what is being evaluated—rubrics—are useful in quantifying employee behavior. By reviewing a completed rubric, employees can see exactly where their strengths and weaknesses lay and can better work towards improving their work habits and performance.
• Evaluation results should be presented in person by the evaluator. This practice allows the employee who received the evaluation to ask questions if he is unclear as to all or part of the evaluation. It also gives the employee the opportunity to argue his case, stating why he made certain decisions and how these decisions were correct. If there is reason to believe that an employee will not take his evaluation well, it is advisable to include a direct supervisor or other individual in this meeting to ensure that it doesn’t become an argument between the evaluator and employee.
• One of the key purposes of a performance evaluation is to promote future growth. To ensure that evaluations result in increased effectiveness in the future, a discussion of future goals should always take place immediately after the evaluation. After looking at the strengths and weaknesses highlighted by the evaluation, the employer and employee should create a written plan to guide the employee in continuing to grow within the workplace.