Performance Evaluations: Your Key to Supercharge Employee Growth

Your palms are sweaty. Your stomach is in knots. You can’t stop pacing, and it’s tricky to focus.

We’ve all been there. That’s performance evaluation dread. And sometimes, it doesn’t quite go away until the end of your appraisal.

Whether you’re an HR director, senior manager, or first-time leader learning the ropes, performance evaluations can be anxiety-inducing. But they don’t have to be. Implementing employee engagement software can help ensure that your employees are receiving the recognition they deserve.

In this article, we’ll explore what a performance evaluation is (and isn’t), provide insights on performance evaluation challenges, and share how to hold effective performance appraisals that stimulate employee growth and development.

What is Performance Evaluation?

Performance evaluation is the process of assessing how individual employees contribute to organizational goals and objectives. 

The purpose of holding a performance evaluation is to gain insight into employees’ effectiveness in performing their roles and responsibilities while analyzing how these impact the business’s overall success.

This is done by sharing constructive feedback, short-term and long-term goal setting, delivering employee recognition, identifying development opportunities, and fostering open, collaborative communication. 

An integral part of performance management, performance evaluations are sometimes known as an appraisal or a performance review. 

Performance Evaluation vs. Performance Management

The two terms are sometimes used interchangeably, so let’s explain. 

Performance management is the ongoing, holistic development of employees to improve performance, productivity, and growth. For example, ongoing developmental feedback, collaborative goal-setting, and regular one-to-ones. 

Performance evaluation is one component of effective performance management. 

Think of performance management as the whole pie and performance evaluation as a slice.

4 Benefits of Effective Performance Evaluation

Performance evaluations are a crucial driver of business success and have the potential to positively impact employee engagement and development.

When conducted thoughtfully and consistently (we recommend once or twice a year), they also contribute to building a culture of accountability and transparency. Here’s what else:

1. Increase employee engagement.

When employees receive recognition for their contributions during performance evaluations, it boosts motivation and engagement. Sharing positive, specific feedback and acknowledging hard work increases job satisfaction and improves employee commitment. 

2. Provide clear, actionable feedback.

Performance evaluations give employees an opportunity to hear clear and constructive feedback on strengths, weaknesses, and areas for improvement. This helps employees understand their performance level and what to do to enhance their skills and contributions.

Providing this level of detail and clarity helps support a culture of continuous learning and development.

3. Identify high-performing employees.

Well-planned and structured performance evaluations help leaders identify high-performing employees who consistently exceed expectations. Recognizing and rewarding these individuals appropriately helps retain top talent and is a marker for others. 

4. Make decisions based on data, not guesswork.

Performance evaluations provide valuable data that can inform talent management decisions, such as promotions, transfers, succession planning, and training needs. By collecting and analyzing performance data, organizations can make more informed decisions about their workforce, leading to better business performance. 

Challenges and Considerations in Performance Evaluation

Performance appraisals don’t come without their fair share of challenges. 

For example, Gallup found that only two out of ten employees agree that their performance is managed in a way that motivates high-level performance. 

This signals that businesses are struggling to nail down impactful evaluations—putting them at risk of not accessing the benefits of effective appraisals.

Here are a few common performance evaluation challenges: 

Unconscious or Conscious Bias

We all hold biases. Unfortunately, managers can inadvertently exhibit a range of biases while conducting performance evaluations. Here are a few examples of how bias shows up.

Halo Effect

A manager’s overall positive impression of an employee influences their evaluation of specific performance aspects. For example, if an employee is well-liked, the manager might rate all aspects of their performance higher than warranted.

Horn Effect 

The horn effect is the opposite of the halo effect. In this example, a manager’s negative perception of an employee influences their evaluation of various aspects of performance. 

Leniency Bias

Managers with this bias rate all employees above average, regardless of their actual performance. This can lead to inflated evaluations and make it difficult to differentiate high-performing employees from those who need improvement.

Risk of Demotivation and Disengagement

Employees who feel their evaluations are unfair or inconsistent might become demotivated and disengaged, harming their overall performance and commitment.

Time-Consuming

The administrative burden of conducting evaluations, collecting data, and holding meetings can be time-consuming for managers and employees—unless you leverage the power of performance management software to speed things along.

How to Hold an Impactful, Growth-Oriented Performance Evaluation in 5 Steps

1. Prepare and gather insights.

Define the purpose of the performance evaluation. Is it for feedback, goal setting, or developmental discussions? Is this a bi-annual review or annual? 

Gather relevant data and information about the employee’s achievements and contributions over the predetermined evaluation period and review previous progress to gather a comprehensive view of employee performance. 

2. Choose the right environment.

Some employees might want to meet face-to-face. Others might prefer a pre-schedule Zoom or Google Meet call. Whatever you decide, ensure the conversation is private, and the location facilitates open communication and discussion.

3. Provide actionable feedback.

Share a blend of positive specific and negative specific feedback to ensure the employee has actionable takeaways that relate to their performance. 

Remember to be specific. Use specific examples to illustrate points, making the feedback more actionable and easier to understand. Focus on behaviors and outcomes, not assumptions or personal characteristics.  

4. Collaborate on goal setting.

Ensure that the employee’s goals are aligned with the organization’s strategic objectives and work together to create effective goals or OKRs (Objectives and Key Results) for the upcoming performance period.

5. Create a development plan.

Based on the feedback and discussion, identify areas for the employee to enhance their skills or knowledge and collaborate to create a development plan with actionable steps, timelines, and resources required for improvement.

By following these steps, managers can ensure that performance evaluations are comprehensive and fair and contribute to career growth, engagement, and overall organizational success. 

Regularly revisiting and refining the evaluation process based on feedback and best practices can lead to continuous improvement and better outcomes.

Take Charge of Performance Evaluation with 15Five

It’s time to take the stress and dread out of performance evaluations. Sign up for a free trial of 15Five to hold effective, growth-oriented performance evaluations that managers and employees will embrace.