4 examples of performance evaluation in the business world

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Performance has power. It allows us to measure employee performance and make decisions on how to improve the company’s performance. We all want to improve our business performance. And increasingly, organizations are consciously deciding to invest their money in human development.

Until now, they had measured this investment qualitatively without much difficulty, but they had not considered how to obtain real data on a per-worker basis. In this article, we will explain what job performance evaluation is, what its objectives are and four ways to evaluate it.

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Remembering what is job performance appraisal

It is a very useful tool for managers and the Human Resources area of companies, since it allows them to know how employees are working.

In general, it is used to measure their performance, reward and recognize those who achieve an exceptional level, improve the performance of employees whose performance is below average, and identify the poorest performers in order to advise them or provide them with training to improve.

5 objectives of performance appraisal in companies

The following objectives are key in the evolution of performance in the business world, so pay close attention:

  1. Evaluate an employee’s performance.
    Knowing an employee’s performance allows us to evaluate his or her performance and determine if he or she is meeting the expectations, objectives and aspirations of the position. For the evaluation to be effective, the objectives of the company and the employee must first be aligned.
    For this evaluation, methodologies such as Objective Key Results (OKR) can be used.
  2. Providing feedback.
    Performance appraisal is a systematic process for measuring and evaluating an employee’s performance against a set of specific objectives and goals. One of the purposes of performance appraisal is to provide feedback to the employee to help them improve their performance and ultimately contribute to the success of the organization.
    For this feedback to be effective, the feedback must be specific, respectful, objective and honest.
  3. Designing a training plan.
    To design an effective training plan in the company, it is necessary to conduct an evaluation of employee performance. This identifies areas in which employees need improvement and, therefore, helps determine what type of coaching or training should be provided.
    Training plans can include group seminars on multiple topics related to job improvement, individual coaching sessions, etc.
  4. Motivating work teams.
    Performance appraisal is a process that examines how an employee’s assigned tasks are being performed and identifies areas where performance is deficient. It is often used as a motivational tool to improve employee performance.
    Recognition of employee success is one of the most important motivational factors, according to Maslow’s pyramid. What if you started by recognizing their accomplishments and using feedback objectively to help them grow? Think about it.
  5. Help improve promotion and compensation decision making.
    Performance appraisal takes into account multiple factors, such as: goals and objectives met, quantity and quality of work performed, or ability to work as part of a team. Depending on the results, documented decisions can be made to promote, improve compensation or compensate employees.
    Implementing a results-based compensation plan is key to maintaining a healthy organizational climate and retaining talent in the company.

4 ways to evaluate performance in companies

A company’s performance can be measured in many ways. Some common metrics include total sales, net profit, number of customers, percentage of sales growth or number of employees. Others, such as customer satisfaction index, number of defective products and employee turnover rate, can also be useful in assessing performance. However, they are not the only ones.

Read on to learn about other key tools for evaluating employee performance:

  1. Objective Key Results (OKR).
    These are goals that are set for people for certain projects or to achieve growth and improvement in different areas of life (personal, economic, work, professional, etc.). OKRs differ from Tasks in that these are actions, while OKRs are the results obtained or pursued by these executed actions/tasks.
  2. Task analysis.
    Tasks are actions that must be executed to achieve an objective. In performance appraisal, the tasks that employees perform are analyzed to identify areas in which they can improve.
  3. Use of interviews.
    In these, supervisors and other managers can talk to employees to gain a better understanding of their strengths and weaknesses.
    Performance appraisal interviews can be structured or unstructured. In general, they focus on the employee’s performance over the past year and are used to evaluate performance against a set of previously established objectives or goals. Often, performance appraisal interviews are conducted annually and may be accompanied by a more formal performance appraisal.
  4. Key Performance Indicator (KPI).
    Key Performance Indicators, also known as Key Performance Indicator or Key Performance Meter or Key Performance Indicator, are a measure of the level of performance of a process. The value of the indicator is directly related to a previously set target, and is usually expressed in percentage values.
    They are designed to show how progress is being made in a particular process or product, making it a performance indicator. Large companies have KPIs that show whether the actions developed, the OKRs established, are bearing fruit or whether, on the contrary, progress is not being made as expected.
  5. What is the next step in performance evaluation?
    Once the performance appraisal has been conducted, an effective training plan can be designed. This plan should provide employees with the necessary training to improve in the areas identified as weaknesses. It should also ensure that employees have the opportunity to practice what they learned during training.
    All companies seek to find the return on the investments they make in human development, but, until now, it had been difficult to do so in a quantitative way, with real data for each worker.

Find out how the ChVmpionMind platform changes this paradigm through ROI!

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