How and by what methods to evaluate personnel performance within the organization. Why should it be done?
The principle «different people are important» does not always work. And if you ask yourself the question of identifying inefficient employees in an enterprise, you will be greatly surprised at how many methods and criteria for assessing the effectiveness of the work of employees’ exist.
But since no business needs ballast in the form of personnel dragging the company down, you will have to choose the most effective method of assessment, and maybe not just one (but, for example, a whole complex).
Goals and Objectives of the Performance Evaluation
Conducting one-time and/or periodic assessment activities may pursue the following objectives:
- Determining of labor efficiency of an individual employee, a position in the staff, the entire department or service, branch and larger units within the organization.
- Identification of the level of proper motivation of an employee or a whole team.
- Normalization of labor discipline. Solving emerging problems and disagreements between individual employees.
- Determination of compliance with the position held.
- Optimization of business processes within the company, identification of internal personnel reserve and candidates for promotion.
- More accurate characterization of employees to provide to the manager (compilation of comprehensive portraits for effective management).
- Ability to determine the need for professional training and advanced training (both for rank-and-file specialists and managers).
- Obtaining a list of the most important characteristics and quantitative indicators, formation of requirements for assessing the quality of work involved in the motivational part of the salary (if there is such a system within the organization, possibly for individual positions).
For example, a labor efficiency audit can be initiated by a company owner if they believe that the current activities of managers do not lead to the expected results. With the help of objective assessment, it will be possible to get a real picture of what is happening and take the necessary measures in a timely manner: change managers, retrain them, rotate personnel, remove redundant positions in the staff or, on the contrary, add missing ones, etc.
The performance of specialists can be evaluated on a periodic basis, if their wages depend on specific performance indicators.
Main Difficulties in Implementing Performance and Quality Assessment Systems
It is clear that top management is definitely interested in an objective assessment of all aspects of the business entrusted to them. But not always the use of labor evaluation systems leads to positive results, especially if the evaluation will be involved in staff motivation.
So, the main problems:
- The system of evaluated indicators may be too complex. Staff must clearly and concisely understand what, how and in what volume they should do.
- Fear of change. It is one thing when an employee takes a position that already has its own evaluation system. They either accept it or refuse it and continue their job search. And another is when an employee has been with the company for a long time and any change is stressful for them.
- Presence of subjective indicators. For example, if labor evaluation directly depends on a particular person, often on the line manager, the employee will associate the fact of low evaluation with personal relations with the head. Such a factor should be excluded if possible.
- Increase in the level of bureaucracy and routine. A large number of additional reports and filling out evaluation sheets can be time-consuming.
Overall, motivation levels may decrease due to inappropriately chosen performance evaluation criteria. All aspects of performance that do not affect evaluation (or pay) may be downgraded in priority during performance, which may lead to unexpected results.
Conventionally, all methodologies can be divided into three main groups (by evaluation criteria):
- Quantitative.
- Qualitative.
- Combined.
Quantitative indicators for assessing performance and employee may include, for example:
- KPIs (short for Key Performance Indicators);
- Points (point system);
- Ranks and ratings (ranking system);
- Benchmarks (used very rarely).
Qualitative assessment methods:
- Competency matrix and arbitrary characteristics;
- Psychological tests and interviews, questionnaires;
- Examination of documents;
- Expert assessments;
- Comprehensive assessment (360 degree methodology);
- Situational assessments and business games.
Combined methods include methods that combine sets of characteristics and indicators simultaneously from qualitative and quantitative methods (one or more). Combined assessments can be combined by summarizing or grouping.
Example of employee performance evaluation and evaluation criteria
Let’s consider an example of implementing an evaluation system based on KPIs. This is a universal and very flexible methodology that came into use thanks to Peter Drucker (in 1954 he presented his methodology of management by objectives).
Initially, the evaluation system was based on the format of result achievement: whether it was achieved or not. In the case of complex tasks or functions, they were considered achieved after all subtasks had been achieved.
Over time, the system has become much more complex. At the moment KPI allows analyzing and evaluating almost any performance indicators of companies, departments or services, individual employees in relation to goals, tasks, and projects.
The methodology has found its application in the assessment of government and commercial organizations. With its help, it is possible to determine the quality of services or products, the efficiency of personnel services, production departments, logistics and supply chain management systems, marketing services, advertising costs, return on investment, achievement of results, etc.
KPI is often used to motivate personnel. It is used to calculate the payments that an employee will receive if they fulfill the goals set for them.
How the result will be evaluated depends only on the selected indicators.
For example, if an employee is engaged in recruitment, it is logical to introduce the following KPIs to assess their effectiveness:
- Number of analyzed questionnaires of jobseekers;
- Number of interviews conducted;
- Number of employees hired;
- Number of employees who passed the probation period.
As can be seen from the proposed KPIs, some of them require a much longer period of analysis than the period of salary payment (probation period usually exceeds 2–3 months, while salary is accrued and should be calculated monthly). Therefore, different evaluation criteria should have different weight — the degree of influence on the final result. By the decision of the manager, the goals that cannot be achieved yet can be closed with 100% value (as fulfilled).
So, in addition to the list of competencies, it is necessary to work out the planned numerical indicators. This means assigning expected, benchmark values to KPIs.
Then a separate KPI will be calculated according to the formula:
KPI 1 = Actual result / Plan
And the calculation of the final score will be done according to the formula:
KPI total = KPI 1 * weight + KPI 2 * weight + KPI 3 * weight + KPI 4 * weight
An example of a specific calculation (just don’t use it as a working sample, it’s abstract data):
| KPI | KPI Weight | Planned | Actual | Total |
| KPI 1 (questionnaires) | 0.2 | 3000 | 2000 | 0.133 |
| KPI 2 (interviews) | 0.3 | 90 | 100 | 0.333 |
| KPI 3 (hired employees) | 0.4 | 10 | 11 | 0.44 |
| KPI 4 (passed probationary period) | 0,1 | 5 | 7 | 0.14 |
| TOTAL KPI | All Weigh Equals 1 | 1.047 |
The table sample when working with KPIs
The final KPI is more than one (over 100%). This means that the employee exceeded the plan and performed better than expected. The motivational part of the salary can be increased by this coefficient.
Other KPIs may be applied for other positions. To a large extent, the evaluation criteria will be determined by the specifics of the business and the tasks facing a particular specialist.
There are no universal formulas and evaluation criteria. You will have to form your own list of competencies for each position in the enterprise. It is logical to link the planning of benchmarks to seasonality, the number of working days in a month and other factors that may affect the result.
Planning benchmarks should be announced in advance, not after they are met or not met. Otherwise, it will be a clear demotivation.
How can Projecto help in evaluating employee performance?
Projecto is a convenient and truly powerful organizer for managers and employees. It facilitates the procedures of planning, setting and controlling any tasks.
The smooth development of a company depends not only on employees and managers, but also on the tools they use. Moreover, such tools are in many ways the key to business success, as they free up a lot of free time for managers and optimize their working environment.
The main way to qualitatively assess the performance of a subordinate is to check the fulfillment of tasks assigned to them.
Projecto allows you to:
- Customize summary and interim reports.
- View the structure of tasks and know at any time to whom they have been delegated.
- Find similar or duplicated tasks or projects.
- Clearly display the work schedule of any employee of the company (in personal and shared calendar).
- Access the history and profiles of every employee in the organization.
At any moment of time you (and at the same time all employees with access rights) will know what a subordinate has done, is doing and will do. To whom a task has been assigned and reassigned, how it is being performed, what results have been obtained or why the goal cannot be achieved.
