When Should You Evaluate Employee Performance? Case Studies Speak
Performance evaluation helps managers bring out the best from their employees and weed out any potential problems. Every company wants its offices filled with ambitious employees who are goal-getters, motivated, effective, and enthusiastic. They want employees that fill their roles perfectly especially those who exceed expectations.
That’s the dream. The reality however is a bit different. Humans, by nature, are flawed. Each of us has our strengths and weaknesses — affecting how we perform at work. Performance evaluations are a great way to show your employees that you care. It shows that your company is there to support them and help them grow. When done regularly, performance evaluations can also help weed out negative traits that might derail the progress of the company.
What Is Performance Management?
Performance management is the act of engaging with your employee to review his performance in the workplace, track goals, gather feedback, discuss issues, and more. Evaluating your employee’s performance allows you to analyse your employee’s strengths, weaknesses, and determine potential ways on how you, as HR, can help your employee grow into a more productive and indispensable member of the workforce.
Why Is Performance Management Important?
Your employees are the backbone of your company. If you want your business to grow, you need to have employees that can get the job done. Employee performance evaluation is crucial to the success of an organisation. Below are some of the reasons why you need to evaluate employee performance:
Reason #1. Measure the growth of an employee
Performance evaluation metrics provide employees and managers with a consistent basis on how to measure employee growth and track progress. Employees feel good about themselves when they know they are making good progress in the company. Performance evaluations also allow employees to set new goals and become an even better version of themselves compared to the last period. Lastly, measuring employee growth allows HR to sort those who have the potentials to fulfil bigger responsibilities in the future (i.e., leadership and career advancement).
Reason #2. Performance evaluation creates a positive culture at work
Nowadays, culture is everything. Performance evaluation can help foster a positive work environment by enabling HR to reward and recognise top performers — further motivating these employees to do even better. Knowing that your company values employee contribution will also motivate the remainder of the workforce to fulfil their roles with enthusiasm. Lastly, establishing a positive work environment will help draw more quality talents towards your organisation.
Reason #3. Identify trends among employee performance
One of the biggest mistakes that managers make is thinking that poor performance equates to a poor employee. This is not always the case. Smart managers will use performance evaluations to determine trends among high performing employees. And then they will create ways on how to help the rest of the workforce develop such qualities. Effective managers also use performance reviews to identify if deficiencies in the workforce are either management and employee development issues or talent issues. This knowledge will ultimately affect how hiring decisions and employee training are made.
When You Should Evaluate Employee Performance?
There is no silver bullet when it comes to evaluating employee performance. Most companies practice either of these two:
1) Traditional Annual Appraisals
A majority of companies still use this technique, although considered by experts to be less effective. This traditional approach to employee performance review involves a time-consuming, formal, performance review scheduled once or twice a year.
During this evaluation, an employee’s performance in the past 6 or 12 months is assessed. Goals are also made for the next 6 months or 12 months. Traditional annual appraisals involve massive paperwork and most of these performance reviews are backwards-looking instead of the more important, forward-looking approach. Also, most managers and employees hate traditional annual appraisals.
2) Continuous Performance Management
Popularly known as Agile Performance Management, this technique involves regular performance reviews to check in with the progress of employees. It also involves providing real-time feedback to workers to improve performance continuously.
Continuous performance management is gaining popularity over the years as more and more cloud HR applications like SageHR empower managers and employees to improve regularly by providing 360 feedback, surveys, and quick feedback features.
If your business is still practising traditional annual appraisals, the time to switch to Agile Performance Management is now.
How Do You Evaluate the Performance of Your Employee?
One of the most effective tools in measuring employee performance are OKRs (Objective and Key Results). What are OKRs? Simply put, OKRs are a tool that helps forward-facing organisations and business achieve their goals by:
- Creating goals that have specific and measurable actions,
- Communicating such goals and actions to employees, and
- Monitoring employee progress towards achieving the goal
An OKR is usually made of two parts — the goal and the key results.
Usually, companies create 3-5 high-level goals every quarter. These goals are ambitious, inspiring, and short.
The Key Results
These are the deliverables that you set for each goal. This should be something that you measure so you know whether or not you are making progress. Each goal in an OKR usually has 2 to 5 key results.
Below is an example:
|Increase profit by 20%||1. Reduce production cost by 10%
2. Increase production rate by 5%
3. Increase marketing budget by 10%
4. Find a new shipping partner by October 2021
|Please customers||1. Improve customer retention to 95%
2. Collect feedback from 30 customers per month
|Improve corporate culture||1. Roll out weekly surveys with 360 feedback loops
2. Launch a new mentorship program by Q4
3. Maintain an employee satisfaction score of 7.5 or higher
The Core Principles of OKRs
The OKR framework involves a series of core principles. These are:
- OKRs should be simple and agile. This is one of the main reasons why businesses set OKRs quarterly (some even do it monthly). Because of its simplicity, businesses ended up spending more time and resources reaching the goal than defining them. The simplicity of OKRs also makes them easy to communicate to everyone involved.
- OKRs are public. This level of transparency creates clarity and alignment within your workforce. OKRs that are readily visible makes sure that every department is on the same page when it comes to achieving company goals. There’s no competition here. Everyone is moving towards the same destination.
- OKRs are collaborative tools. Because OKRs are simple and easy to implement, employees know that each of them has a role to fill. This sends a message that it takes the collective effort of all to achieve the goals you’ve set for this quarter.
- OKRs are bidirectional. Unlike traditional goal setting, OKRs are not cascaded from the C-suite to the common employee. Instead, top-level management creates OKRs for the entire company, and then each department is encouraged to build tactical OKRs that are aligned to the goals set by the leadership. This practice creates a sense of ownership and accountability for each OKR that has been set.
Best Practices of OKR
Aside from the core principles of the OKR framework, some OKR best practices can help turn this technique into a changing force in your company.
- OKRs should not be treated as an evaluation tool. OKRs encourage employees to set ambitious goals. And they are more motivated to do that when they know that their standing will not be affected if they don’t achieve every OKR.
- It’s ok to not reach 100 per cent. Most companies only achieve up to 70 per cent of their OKRs. If your company earns a perfect score all the time, chances are, the goals you’ve set are not ambitious.
- Everyone must be committed. OKRs will only work if everybody in the company is on board.
- OKRs must not be labour intensive. Managers love using OKRs because they are lightweight. Don’t overburden your employees by introducing additional paperwork and meetings. Keep your OKRs simple.
- Be patient. If your organisation is just transitioning to OKRs, be patient. No one can do it perfectly the first time.
How HR Software Can Help with Office and Remote Employee Performance Evaluation
Sage HR is a cloud-based HR application designed to empower managers and employees. It comes with a module for tracking performance to make sure that you are getting the most from your talents. It enables your company to set goals or OKRs, give 360 feedback, schedule 1-to-1 meetings, get quick feedback, and roll out surveys. Sage HR’s performance module can help turn the insights you gain from these valuable tools into something that can help draw out the real potential of the people working with you.
Being a cloud application, this HR software is perfect for evaluating not just the performance of your office employees but your remote workforce too! You can use SageHR from any device, anytime, anywhere.
With a redesigned look and a completely remastered user experience, the new Sage HR app is the perfect companion to our award-winning web-based HR solution. Download the app now on the App Store or Google Play.