Employee performance evaluation system

If you want to get a room full of management and leadership experts excited, ask them to discuss the merits of employee evaluation systems. Some love evaluations and find them to be very important, while others hate them, thinking they're a waste of time. Very few have are without an opinion.

Employee evaluation systems are time consuming and tend to eat up resources. Before starting, or continuing, an evaluation system, a leader should ask some important questions. The answers to these questions will make a decision about whether to continue with the system rather obvious.

1. Why do we need an evaluation system? What do we do with the reports and information the system generates? Does the system really provide useful information on employees and does the company act on that information? Many evaluations go in a file and stay there. Some systems provide a lot of information, but are only used to decide if the employee gets a raise that year. A good use of an evaluation system would be to allow evaluation of employees for significant promotions. If that's the case, does the evaluation address potential, or just current performance?

2. How does the system work? Is it time consuming or does it allow for accurate assessment without adding significantly to a managers workload? This may seem a little odd, but it makes sense. If the evaluation requires managers to sit down once a year and produce a lengthy document, based only on their memory of the employee's performance that year, it's probably not as accurate as a system that allows a manager to quickly document important events as they happen.

3. Just what is it you're evaluating? Often employees are evaluated based on a manager's idea of what that person should be doing. The employee may have no idea how the evaluation is done or what they should be doing to earn better ratings. If the system doesn't require the manager to spell out goals and provide regular feedback, then it is not as effective as it could be. A couple of pitfalls in the area are the rating scale and the 360 degree feedback.

3a. Scales (1 -5, 1-10, etc) is quite common, but what do they tell a manager. Use of scales is highly subjective and tends to result in quotas. Also, there is sometimes an inclination to say something like, "If I give this person the highest rating, then what will they have to work for?" That's bad enough, but think of what happens when one manager takes that attitude but another one doesn't.

3b. A few years ago the idea of a 360 degree feedback gained some popularity. I'm over simplifying here but essentially the idea is that everyone evaluates everyone. The idea of everyone evaluating everyone might seem nice, but what's the benefit to the company? Is it really worth the effort required? It's important to weigh the cost against the likelihood

that such a system will produce valid, or valuable, results. Unless the company is very open and everyone feels complete safe, the chances of the 360 degree feedback system working are pretty remote.

After carefully evaluating these three questions, take a look at your current evaluation system, or the one you are considering implementing. Is the expected return really there and is it worth the cost?

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