What function of management refers to the evaluation of actual performance?

Just as students work harder when they are being graded, employees also behave differently depending on the company's choices of performance evaluation systems. Are you a bit confused about Performance Evaluation? Let's dive right into this new business concept!

Performance Evaluation Definition

A performance evaluation is a formal business procedure used to evaluate employees' work and productivity based on their job responsibilities.

Modern organizations have adopted more complex performance evaluation principles, which consist of three major types of behaviors:

1. Task performance refers to employees' duties and responsibilities in their current roles. These encompass tasks that are included in their job descriptions.

2. Citizenship refers to employees' contribution to the psychological environment of organizations, such as their willingness to help others or how they treat their coworkers.

3. Counter-productivity: this refers to harmful behaviors that damage the image of the organization, such as harassment, damage, avoidable absences, or noncooperation.

Thus, in performance evaluation, good employees should demonstrate the first two dimensions while minimizing the third.

Performance Evaluation Importance

In business, performance evaluation can bring companies various benefits.

First, performance evaluation allows the management team to make appropriate human resources (HR) decisions such as promotions, transfers, or terminations.

Second, performance evaluation assists HR practitioners in identifying the staff's needs and arranging timely training and development sessions.

Thirdly, performance evaluation enables organizations to give transparent and evident employee feedback.

Lastly, performance evaluation backs companies in providing the basis for rewards, promotions, or pay raises.

What is the most apparent benefit of performance evaluation in organizational behavior?

When it comes to organizational behavior, performance evaluation is often regarded as a mechanism for communicating feedback and determining reward allocations.

Types of Performance Evaluation

While various types of performance evaluation at work exist, most companies rely on the three most popular criteria to evaluate their employees' performance, which include individual task outcomes, behaviors, and traits.

Types of Performance Evaluation: Individual Task Outcomes

When it comes to individual task outcomes, there are diverse measurement metrics: production quantity, cost per unit of production, overall sales, etc.

What is a possible outcome indicator for a marketer?

It could be everything ranging from the total generated leads or return on investment (ROI) to social media engagement.

Types of Performance Evaluation: Behaviors

When there is a need to evaluate the contribution of each group member to the group's performance, management will try to evaluate the individuals' behaviors to determine their performance.

What are some criteria to evaluate individuals' behaviors at work?

There are various criteria depending on specific roles and industries. For example, a social media marketer can be evaluated based on their activeness in producing social media content, while a professor can be evaluated considering their teaching style and method. Besides, you can find various criteria such as one's activeness within a team, individual communication skills, and so on.

Types of Performance Evaluation: Traits

Management also refers to individuals' traits at work as a means of evaluation. Modern organizations are greatly concerned about their employees' personalities at work, assuming that good employees with positive traits may perform well.

Accordingly, managers might look for positive traits ranging from a good working attitude, willingness to learn new skills, communicating effectively and convincingly within teams, etc.

Are you still in the mood for more examples of positive traits? Have a quick glance at our explanation of the Trait Theory of Leadership.

Performance Evaluation Process

At the heart of the performance evaluation process lies the question, "Who should evaluate an employee's performance?".

Can people other than managers do well in performance evaluations?

The answer is yes! As current workplaces have become more diverse in organizational structure consisting of various teams and departments, managers may sometimes find it hard to personally connect with their employees. Instead, it is team leaders or coworkers that have formed a closer relationship with team members. Thereby, peers, subordinates, etc., can do a good job evaluating other employees at work.

Within modern workplaces, there are two main processes of performance evaluation, which are multiple sources of rating and the 360-degree evaluations. They both require different evaluators to evaluate a specific individual and average the diverse ratings to generalize one's evaluation result. Accordingly, such evaluators can range from managers and subordinates to clients and coworkers. Thus, both processes assist companies in implementing a more objective, unbiased, and equal performance evaluation procedure.

Performance Evaluation Methods

You may now search for methods to evaluate employees' performance. Accordingly, there are five most popular performance evaluation methods at work, which are:

1. Written Essays,

2. Critical Incidents,

3. Graphic Rating Scales,

4. Behaviorally Anchored Rating Scales,

5. Forced Comparisons.

Performance Evaluation Methods: Written Essays

In the written essays method, evaluators evaluate an employee's performance-related characteristics, including individuals' strengths and weaknesses, previous work results, possible work violations, etc. While this is a performance-centric approach, written essays are often subject to no standardized scoring system; thus, managers might find it difficult to compare and contrast between different essays.

Performance Evaluation Methods: Critical Incidents

The critical incidents method aims to separate incidents when employees execute a job effectively from incidents when they do not.

The critical incidents method evaluates employees' behavior to differentiate between an effective job execution and an ineffective one.

For example, when it comes to a social media marketing team, managers may wish to perform critical incident methods to show employees what should be incorporated into a social media post and what should not be, thus leaving room for future improvement.

Performance Evaluation Methods: Graphic Rating Scales

In the graphic rating scales method, evaluators rate performance factors on incremental scales, often following a five-point Likert scale format. As opposed to the other methods mentioned previously, this method is more time-saving for managers. Further, results from graphic rating scales can be coded as quantitative data for comparison if needed.

A graphic rating scale is a method to rate performance factors on an incremental scale.

Performance Evaluation Methods: Behaviorally Anchored Rating Scales

In the behaviorally anchored rating scales (BARS) method, evaluators combine two methods: critical incidents and graphic rating scales. To execute the BARS method, evaluators should first complete the critical incidents list, followed by ranking these factors on incremental scales.

Behaviorally anchored rating scales (BARS) combine factors from the critical incidents and graphic rating scale methods to rate employees' performance.

Performance Evaluation Methods: Forced Comparisons

Forced comparisons allow the organization to compare employees' performance. The two most popular comparisons are individual ranking and group order ranking.

Forced comparisons evaluate an employee's performance by comparing it to other employees' performance.

In group order ranking, employees are compared based on a particular classification. For example, marketing evaluators can classify marketers into the top one-fifth individuals with highest generated leads to compare their performance.

In group order ranking, evaluators divide employees into classifications to make comparisons.

In individual ranking, employees are often ranked from best to worst. For example, evaluators can rank marketers from best to worst regarding their total generated leads from email marketing activities.

In individual ranking, evaluators rank employees from best to worst.

Performance Evaluation Improvements

Although there is no guaranteed way to achieve 100 percent accurate performance evaluations, there are various ways to improve their objectivity and fairness.

Performance Evaluation: Multiple Evaluators

The more the number of evaluators, the higher the accuracy of information gets. Thus, organizations can improve the quality of performance evaluations by inviting multiple evaluators to assess an individual's performance.

Why should evaluators trust multiple evaluators in performance evaluation?

At universities, students have their final GPA calculated by averaging multiple grades from different courses to ensure generalization and avoid bias. Similarly, in performance evaluation at work, multiple evaluators are highly recommended to produce a generalized and unbiased view of an individual's performance.

Performance Evaluation: Selective Evaluation and Evaluator Training

To improve agreement among evaluations, raters should only rate areas of their expertise. Further, raters should work closely with the evaluatee to ensure they can objectively observe the individual's behavior and traits.

Besides, organizations should properly train evaluators to develop a standard definition of good performance at work. Also, evaluators should be encouraged to give more detailed descriptions of individuals' behaviors to validate their evaluation.

Performance Evaluation: Due Process Systems

Due process is an emerging method in modern workplaces to improve fairness in performance evaluation.

What are the typical characteristics of due process systems?

There are three main characteristics of due process systems:

1. Individuals know exactly what the organization expects from them.

2. There is a fair hearing regarding violations to encourage the employee to respond.

3. The final decision relies on evidence, not bias.

Performance Evaluation Examples

How is a real-life written essay in performance evaluation? Let us guide you through a typical example in a business context.

A short evaluating essay from the Chief Director to a Project Manager

As a quarter has passed, I would like to review your performance.

As a Project Manager at ABC company, you have satisfactorily met your role's expectations. Firstly, you and your team have completed every project on time and within the provided budget. Some projects even finished early, which is wonderful. Secondly, our client's feedback has been positive so far, implying a successful implementation.

However, there are still some areas for skill improvement. In Project A, some team members were confused about the timeline and KPIs. Thus, I expect better communication of goals and strategies from you next time. Further, in Project B, team members reported a hostile attitude from you during final project meetings. Although I understand your huge workload and stress, you should manage your emotions more wisely at work.

Congratulations on your performance this quarter. I hope my evaluations will be convincing and constructive for your future improvements.

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