Employee performance appraisal is an integral part that all companies should invest time and effort in. Nowadays, companies are no longer focused solely on profits and quantitative results. While those are still essential to the survival of a business, management needs to focus on the people working for them as well. Without performing employees, businesses will have a hard time achieving their targets on time, and retaining employees to stay in the company longer would be a possible challenge.

What is employee performance management?

In a nutshell, employee performance management is the evaluation of an employee’s progress towards the team’s or the company’s targets. Performance management occurs between the manager and their team members in order to assess pain points, achievements, and room for improvement. It also takes into consideration the efficiency of how an employee operates and how well they work with other employees within or outside their departments. 

Performance appraisals typically occur several times throughout the year, depending on the company’s termly or quarterly goals. The time frame also depends on the appraisal process the company adapts to. For instance, a 360-degree appraisal requires a longer time frame as it considers feedback and review not only from the managers but from peers and the employees themselves.

Why is performance management important?

Employee performance management is crucial for every company. This is to ensure that every individual is aligned with the bigger picture while also working towards their professional goals. An employee’s performance appraisal is a perfect time to re-assess employees’ understanding of the targets and how they plan to achieve them during the given time frame.

It is also a chance to create action plans regarding professional and personal development that can be supplemented in the coming quarters. For example, an employee expresses the desire to lead more individual projects so performance appraisals can be a time to plan how that can be executed without neglecting the bigger company goals.

Benefits of performance management

Making sure that your employees are aligned with the company’s targets is only one benefit of conducting an employee’s performance appraisal. During this process, it makes it easier for managers to point out members that are deserving of a promotion, a raise, or any other awards. It will boost employees’ morale when they are praised for good performance and all the progress that they’ve achieved.

Performance management can also highlight any needs for training or certification. This is useful when there are employees who are interested in learning a new skill or if they are keen on shifting their career focus. It’s always a good idea to invest in training your employees as it will not only benefit the company but it can also strengthen their expertise, making them a trusted industry expert in their respective fields.

Types of performance appraisal process

A performance management process differs depending on what method each company uses. There are seven types of employee’s performance management processes and they are:

  • General Appraisal
  • 360-Degree Appraisal
  • Employee Self-Assessment
  • Manager Performance Appraisal
  • Technological Performance Appraisal
  • Project Evaluation Review
  • Sales Performance Appraisal

General Appraisal

This is the most common type of performance management process. It occurs throughout the year and it only involves the manager and the employee. At the beginning of the process, both managers and employees set goals and highlight rooms for improvement to be worked on in the future.

These goals are then constantly reviewed during one-on-one meetings where managers and team members can keep track of their progress. From these goals, managers can supplement their employees with training or programs that can be beneficial for their development and future performance.

360-Degree Appraisal

This is a suitable performance management process to implement if cross-team collaborations happen often in your company. The 360-degree appraisal process allows third-party individuals to offer feedback about an employee. This includes other team members, peers, and stakeholders who have worked with the said employee before. The 360-degree appraisal process usually focuses on the behavioral performance of the employee when working cross-team or delivering results to stakeholders.

Employee Self-Assessment

Instead of only relying on the managers’ feedback about an employee, this reverses the process and allows team members to assess themselves. It provides direct feedback and highlights the possible improvement area straight from the employees. An employee’s self-assessment will then be calibrated with the manager’s performance review. If there are any gaps or differences, it will then be discussed in a private meeting where action points can be developed to bridge those gaps.

Manager Performance Appraisal

Most types of performance management processes tend to focus only on the employees. This type of appraisal allows subordinates, clients, and stakeholders to review the performance, behavior, and progress of a manager. These managers will have a different set of elements to be appraised on like how well they delegate tasks, solve problems, and communicate with other managers and upper management.

Technological Performance Appraisal

A technological performance management process is usually conducted for employees whose hard skills are an asset. This can include software engineers, customer service representatives, operational employees, and so on. This type of appraisal assesses an employee’s expertise in executing tasks relating to their roles. Unlike other types of performance reviews, this completely omits feedback from peers as well as components of behavioral assessment.

Sales Performance Appraisal

Similar to the technological performance appraisal, the sales performance appraisal is a type of assessment specifically designed for members of the sales department. It takes into account the quantitative results of each employee like sales, customer retention, conversion rates, and more. The goals for this type of appraisal relate closely to the company’s financial targets and do not focus on professional or personal development.

Project Evaluation Review

The project evaluation review type is best if you want a constant performance appraisal for your employees and managers. Instead of waiting until the end of the year or a quarter, appraisals are conducted at the end of each project. It does not have to be as extensive as a 360-degree appraisal but it should cover feedback and insights from all parties involved. It’s best to set the expectations before each project begins so your team members will always be aligned on what they will be assessed on.

How to plan a performance management system

Planning performance appraisals require a lot more than just choosing which type is the most suitable for your department or company. This process typically occurs in stages, starting from the initial goal setting to execution, tracking, and reviewing. 

Goal Setting

Before settling on a specific type of performance management system, it’s best if you already have your goal set and aligned with all line managers and upper management. During the process of goal setting, keep in mind that each KPI or OKR needs to follow the SMART approach: Specific, Measurable, Achievable, Relevant, and Time-Based.

After general OKRs are finalized, they can then be divided into smaller objectives that can help employees have a laser focus on what they need to achieve. This can also be followed by goal setting for individual employees regarding professional development and career progression. Take this time to review the job description and roles of each employee as well.

Execution

After goals are set and expectations are put in place, human resources can then figure out the best type of performance management appraisal to implement. The human resources department should also develop the best and smoothest strategy to roll out the appraisal process, including creating a timeline and an organized checklist to make it easy for employees to follow through. It’s best to create a centralized folder to manage documents related to performance appraisals, feedback forms, and calibrated results all in one place.

Tracking

Performance management tracking can be as simple as conducting one-on-one sessions between the manager and the employee. Whether it’s held every week or bi-weekly, each session can cover specific agenda related to the goals and the progress towards achieving those goals. A one-on-one session can also be the time to uncover any pain points, challenges, and short-term feedback a line manager has for their employee and vice versa.

Reviewing

At the end of every quarter or business year, that’s when the whole company reviews performance and goals that were achieved. It is also a time to what challenged were faced or any inefficient processes that need to be omitted in the future. Aside from that, employees can review their own past performance and professional developments through self-assessment, feedback, and calibration from managers as well as stakeholders. If any aspect of the performance management process proves to be challenging for managers and employees, this can also be discussed during the performance review stage.

All in all, performance management is a process that should always be considered and constantly reviewed. It’s essential to ensure that all employees are thriving and always progressing so they can contribute to the company’s goals. Without performing employees, it will be a challenge for businesses to fulfill their potential.

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