Employee evaluations are a critical component of running nearly any business — and having an effective measurement system in place helps you get the most from your staff. Besides this, evaluations help you recognize worker achievements, objectively compare multiple employees and identify areas where improvement is needed. The question is, “How do you select an effective system that fits your company’s specific needs?” To answer this question, let’s go over four popular types of employee performance evaluations and the advantages each offers.
1) Numerical Rating Scale
Due to its simplicity, this is one of the most widely used systems and tends to be highly effective. It’s also popular because it allows employers to measure employee performance on a plethora of areas such as teamwork, communication skills and reliability. A numerical rating scale is beneficial because a business can customize the system to rate whatever employee traits or characteristics it deems as important. This commonly involves rating individuals on a (1 to 5) or a (1 to 10) scale with lower numbers being unsatisfactory and higher numbers being satisfactory. In turn, employers can use tangible data to determine if an employee’s performance is poor, average, good or great.
This is another simplistic evaluation system and is a clear cut way to track progress. In an objective-based evaluation, an employer and employee will agree upon a specific goal for the employee to meet coupled with a deadline. If the employee meets the objective, then it speaks highly of them and vice versa. This is perhaps the most black and white of all systems and is a practical way to monitor the overall success of employees.
3) 360-Degree Appraisal
If you’re looking for comprehensive feedback on an employee’s performance to form in-depth insights, then this is the way to go. A 360-degree appraisal works by gathering feedback from multiple parties such as managers, coworkers, customers and even vendors. The more information you collect, the more accurate the performance review becomes, and the more the picture comes into focus. Although this form of evaluation is somewhat laborious and time-consuming when compared to the first two techniques, many employers prefer it because of the unbiased data they receive and the multi-dimensional vantage point it creates.
4) Critical Incidents
This system is defined as “A method of performance appraisal involving identifying and describing specific events (or incidents) where the employee did something really well or something requiring improvement.” For example, you might record an instance of a stressful situation where an employee out-shined and exceeded expectations. On the other hand, you might record a serious mistake an employee made that was detrimental to productivity and created a lot of lingering problems. For a critical incidents evaluation system to be effective, it’s important to keep detailed records — and you may want to implement a rating system for increased objectivity.
Understanding the concept behind different types of employee performance evaluations allows you to choose which one, or combination, is best for your business. In turn, you’ll be equipped to objectively measure the progress of your employees and ultimately fine-tune your operations.