Performance evaluation involves the review of multiple factors to appraisal how well an employee has completed his or her assigned tasks. The essential steps in a performance evaluation are as follows:
- Create a performance standard. This is a target related to the performance of a specific employee. These standards should be in sync with the company’s overall strategic direction.
- Provide a support system. The company’s resources are geared toward supporting employee activities to meet performance standards, including giving sufficient training to employees.
- Match management coaching to standards. The management team routinely monitors employee performance and provides coaching in how employees can meet their performance targets.
- Guide underperformers. When employees are underperforming in comparison to performance standards, give them guidance and support to improve their capabilities.
- Terminate employment. If employees clearly cannot meet company expectations, terminate their employment with the company.
- Recruiting feedback loop. Use the information from the latest round of performance evaluations to alter the company’s recruiting criteria.
A possible additional step is to link the achievement of a performance standard with a change in compensation, such as a reward, bonus, or pay increase. However, in environments where compensation is instead tied to team goals or the performance of the entire company, there may be no direct linkage between individual performance and the reward system.
A key concern when installing any type of performance evaluation system is the amount of time required. A detailed system that mandates the creation of goals, continual monitoring, and review sessions will require a significant amount of staff time. If employees are already overwhelmed with work, it might be best to begin with a low-key approach, such as immediate feedback of perceived issues, and see if that yields adequate results. It is entirely possible that a more detailed and formal system is not needed, in comparison to the amount of time required.