5 Common Performance Evaluation Methods for Your Business

By Marianne Chrisos - Last Updated on January 6, 2020
5 Common Performance Evaluation Methods for Your Business

Performance management is a key practice in growing a successful employee base and a healthy company culture. Effective performance management is an ongoing process that helps to align overall business expectations with individual contributions and helps to measure an employee’s progress and impact. One key part of performance management is performance reviews and employee assessments.

UpRaise defines performance reviews and their impact on businesses by saying, “Performance appraisals form an essential part of the HR department as they provide important and useful information for the assessment of employee’s skill, knowledge, ability, and overall job performance. These appraisals are not only used to eliminate behavior and productivity issues but also to motivate employees to contribute more.” These regular meetings create a formal process to put some definition around individual success and set expectations for the future.

Businesses employ various methods to conduct their performance reviews and gauge employee performance, impact, productivity, and their contributions in relation to the overall business mission and business goals. Here are some methods for evaluating employee performance to consider.

Common Performance Evaluation Methods for your Business to Explore

1. Self-assessment

A self-evaluation requires an employee to measure their own performance against a certain set of predetermined criteria. This is not usually the only metric of evaluation used in a performance review but is part of a larger discussion between managers and their employees to discuss overall performance and help to address any knowledge gaps. A self-evaluation or self-assessment isn’t a primary form of performance review, but it is a valuable and insightful tool for many employers and employees alike.

2. Behavior checklist

Checklists can be a good way for some businesses to check employee performance. Developing a checklist of criteria and behaviors that employees need to display to be considered successful is a quick and direct way of assessing an employee’s value. If a list includes criteria like organization, keeping projects under budget, teamwork, and good vendor communication, it’s important to make sure that the appropriate weight is given to each.

3. 360-degree feedback

This method has become increasingly popular across enterprise businesses in certain industries. A 360-degree feedback review is a holistic, comprehensive look at an employee’s performance that solicits feedback from outside sources. In addition to management feedback, assessments include a review from peers, direct reports, supervisors, other department team members, and even customers. Anyone who an employee works with regularly can be pinged for feedback that would be useful in helping an employee better understand the whole of their performance. In addition to performance and task-related review points, 360-degree feedback gives employees an opportunity to hear about the evaluation of their character, leadership skills, and other less metric oriented assets.

4. Management by objectives

The MBO method of performance evaluation is a more modern appraisal approach. Instead of simply receiving directions or goals from management, employees are made to be part of the process. By agreeing on specific goals and objectives, employees have a much better understanding of what the metrics of success are and future feedback and follow up will feel less subjective. Also, when employees are involved in the goal-setting process, they are more invested and engaged in their progress. Asking questions like “How do you think your job can impact the business? What’s something you can work to achieve to specifically support business or department goals?” can be a good way to start goal-setting conversations in the MBO performance evaluation method.

5. Ratings

Using a rating scale or grading scale is a common way to measure and communicate employee performance. Employers develop criteria – including behavior like organization and timeliness, as well as other knowledge, skills, and completed projects – and all are up for rating in the feedback process. Most reviews that function on a rating scale use a 5 or 10 point system, and it’s important for employers to make it very clear to both management and employees in review what part of the scale indicates success and which is a failure. Properly setting expectations helps keep employees from being disoriented or disappointed when they get a 3 out of 5 and believe that’s above satisfactory when according to business standards, it’s merely average.

How do you know which performance evaluation methods to utilize for your business? WebPT smartly notes, “While these methods each have their advantages, they might not all fit with your leadership style or your clinic’s culture. Consider the job roles—and the people who fill them—you’ll need to evaluate before you choose your review method. Regardless of the method you select, make sure your evaluation is rooted in metrics—not personal opinions.”

While HR and even performance management processes are more than just conducting employee reviews, the method you use to conduct and guide these discussions is an important factor in the success and impact of your overall performance management.

Marianne Chrisos

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.

Marianne Chrisos

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a c...

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