Complete Guide to Conducting Employee Evaluations and Performance Reviews

When done correctly, employee evaluations can help both employees and employers improve their communications, expectations, and work output. Performance reviews are an essential way to measure how productive an employee is, find areas where they could do better, and even improve processes for the whole organization.

Having clearly-defined performance criteria can also help managers spot potential problems with company policies, procedures, or management strategies.

This guide will show you how to run, plan, and set up an evaluation. Let's get started.

Benefits of employee evaluations

A proper evaluation process benefits both the employee and the employer.

By evaluating employees often, managers can identify problems quickly and give feedback to boost productivity and mental wellness.

Profession evaluations can help employees set goals. The feedback helps set employee expectations.

Benefits for Employers

Employees who know more about their jobs are more confident, motivated, and happy. A happy workplace increases employee engagement and employee retention.

Considering that it costs about a third of a worker's salary to replace just one worker, employee performance reviews do more than keep team members motivated. In the end, they help a business' bottom line.

Employers can also use employee evaluations to improve their processes and procedures. An employee performance evaluation can give employers the information needed to calculate raises, bonuses, and resource movement.

Three different ways of evaluating employee performance

Here are three ways employers can evaluate employee performance:

  • Standard evaluations

  • Self-evaluations

  • Team evaluations (360-degree feedback)

Each of these methods has its own unique purpose. Let's dive in.

1. Standard evaluations

The manager reviews the employee's work and overall performance with standard evaluations. Then, they'll meet with the employee to talk about their assessment.

Standard evaluations require top-down feedback. Some managers may use a template or checklist to organize their thoughts during the employee evaluation.

Standard employee evaluation considerations

Standard evaluations can be intimidating for employees. When employees feel intimated, they will be less likely to speak up for themselves.

Managers should give positive feedback and constructive criticism in standard employee evaluations. Start the meeting on a friendly note and ask employees to share any tips or ideas for improving their work.

2. Self-evaluations

In a self-evaluation, employees rate their work performance, discuss concerns, and list how they've helped the organization.

There’s no need to overcomplicate things here. Most of the questions on the form should mirror standard evaluation forms. The goal is to see if the employee’s impression of their performance aligns with their co-workers and managers.

If there’s a disconnect, self-evaluations give the employee time to reflect on past performance and develop a plan to improve.

Considerations for managers using self-evaluations

Managers should complete self-evaluations before meeting with employees. By doing this, the manager and the employee will be better prepared.

Employers should use self-evaluations to make decisions about each employee. These ideas may include giving them more tools and training or changing their job description.

Self-evaluation can reveal where people have differing opinions. It might be better for the employee and manager to write about these differences and give specific examples. Taking the time to write it down shows that they thought about it and kept track of it.

Self-evaluations can be challenging when employees think they're performing well, but their manager disagrees.

Of course, these reviews are usually more beneficial when combined with other review processes.

3. Team evaluations (360-degree feedback)

In a team evaluation, people who work closely with an employee give their feedback.

The employee's team members don't have to worry about being judged because this feedback is anonymous. Anonymous feedback makes it easy to say what they think without argument.

Considerations for managers using team evaluations

The questions on a team evaluation form should be the same as those on a self-evaluation form. Focus on core competencies and categories of behavior that affect the company's culture.

Employers should include the following questions in a team evaluation:

  • Quantitative questions: employees score their peers' performance on a scale or point system.

  • Open-ended questions: employees type in their comments

After submitting the evaluation forms, the results should be written down and given to the employee.

One of the best ways to put your team's and organization's values first is to set up a 360-degree feedback loop. However, these reviews are subjective, so keep that in mind.

Employers shouldn't use them to decide on bonuses, pay raises, or promotions. These decisions need a more detailed look that includes the manager's notes, employee contributions, and job-specific metrics that affect the organization's goals.

How to conduct an employee evaluation

For an employee evaluation, you need a plan that meets the goals of both the employer and the employee. All evaluations of employees should be done in the same way, using clear standards.

The first step is to look at how an employer will evaluate the employee. This way, they can identify both the employee's strengths and areas of improvement.

The criteria for employee evaluations

An employee evaluation should feel like a typical conversation — but that doesn't mean you shouldn't have a plan.

Start by going over the criteria for evaluating an employee based on their position and initiatives, the organization's goals, the company's culture, and its size.

Be honest and let every employee know the performance standards and evaluation criteria.

When going over the evaluation criteria, make sure you have well-written notes about how the employee performed. When a manager depends on what they remember, it can hurt their credibility.

Employees can easily dispute any claims about how well they do their job. That's why employee performance proof of work tools are a big help here.

Even though the criteria will be different from one company to the other and from one employee to the next, an employer may look at a few core skills:

  • Communication

  • Teamwork

  • Quality of work

  • Organizational skills

  • Creativity

  • Work ethic

  • Innovation

Think about the metrics that will help tell the story of the employee. For example, if a manager beats their sales goals, it could mean that they are creative about finding new ways to make money.

Identify key strengths

If employees' strengths are recognized, they are more likely to do a good job.

It also helps give employees a better understanding of the skills that impact the company most. These strengths could include communication skills, problem-solving skills, and job-specific abilities.

Find opportunities for growth

It can be hard to give constructive feedback. Still, this part of an evaluation is essential for employee development.

For example, employees may need to improve their time management skills. When these events occur, thoroughly document them. Next time you check in, provide a positive solution to this observation.

Ask about their work goals

Research shows that companies that appropriately assign roles have a 42% lower turnover than those that don't.

The only way to know for sure what these goals are is to ask.

Here are some examples of questions that help:

  • How do you think the skills you have now can help you reach your work goals?

  • What skills do you want to get better at for your job?

  • How can we help you get better at what you do?

  • What do you enjoy most about your job?

  • What do you find most challenging about your job?

Asking about professional goals shows employees you care about more than their work. You show your employees you're willing to help them succeed.

Make a plan together

After discussing what went well and what could be better, it's time to create a plan to improve performance. When making a plan, both the manager, the employee, and sometimes even the other departments need to have input.

The plan should include clear, measurable targets and timeframes. Managers should talk about how they can help the person learn new skills and grow professionally.

The employer and the employee should schedule follow-up meetings regularly to ask questions and talk about any concerns.

End with optimism

When evaluating an employee, everyone should feel relieved and have a positive attitude. Some employees get nervous during formal evaluations, so keeping a positive tone is essential.

According to research published in the Journal of Industrial and Organizational Psychology, 59% of employees surveyed felt that performance reviews were not worth the time invested. Additionally, 56% believed they did not get constructive feedback.

How do you create a successful employee evaluation?

If done correctly, the employee evaluation process can help improve employee productivity, job performance, and work satisfaction.

The following tips will assist you in making the performance appraisal process more manageable and successful.

Evaluations should be face-to-face

An employee evaluation should be a personal matter requiring face-to-face interaction — even if your team works asynchronously.

Managers can make these face-to-face evaluations less stressful by having casual one-on-one meetings regularly. The face-to-face review shouldn't just happen once a year.

Make sure you schedule enough time

Employees should know about their upcoming self-evaluation a month in advance to prepare. Managers also require time to review employee notes and performance metrics.

When evaluating an employee, give them feedback and allow them enough time to express their opinions.

It can be hard to find time to meet with all of your employees, but you should never be in a rush. When you don't have time for an employee, it can discourage them.

Provide a positive solution for negative feedback

A positive solution should always follow negative feedback.

If an employee is upset after an evaluation, they may lack the motivation to act. Providing a positive response to negative feedback empowers employees to impact the business in beneficial ways.

How often should you give employee reviews?

There is no one answer to this question. Still, most people agree that employers should do employee evaluations at least yearly.

Employers should, however, conduct less formal reviews and one-on-ones regularly. Managers frequently base their evaluations on the most recent weeks they can recall. More frequent assessments help to avoid this issue and provide a clear record of an employee's performance.

It also ensures that employees have clearly articulated goals and objectives that they can work on year-round — not just at the last minute.

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