Glossary of Human Resources Management and Employee Benefit Terms
An employee evaluation, also known as a performance review, is a periodic appraisal of an employee’s performance by their manager. It’s an opportunity to assess the employee’s progress, praise their accomplishments, and collaborate on goals to improve performance and help achieve company objectives.
When they are done right, employee evaluations can have important benefits for both employers and employees, including:
Improving communication between managers and employees
Improving job satisfaction and retention
Increasing performance and profitability
Identifying star performers and candidates for promotion
Providing help for employees who need further training
Improving company culture
Employee evaluations have sometimes been called annual reviews because traditionally most companies conducted them once a year. But it’s hard for employees and managers to accurately remember everything that happened during an entire year—and studies show annual reviews do little to improve performance.
In recent years, an alternative to annual reviews has proven its worth. A growing number of employers are providing employees with more frequent feedback, and research confirms it produces better results. Depending on needs and circumstances, employee evaluations may be conducted quarterly, monthly, or even weekly. Some organizations go further, replacing employee evaluations with frequent check-ins and one-on-one meetings.
Traditionally, yearly employee evaluations have taken place as formal meetings between an individual employee and their manager in a private workplace room or office. Strategically changing the timing improves the process and results. Companies that shift to more frequent evaluations will find it easier to accomplish their performance management goals with shorter informal discussions that update recent developments instead of trying to reconstruct an entire year. This helps managers solve small problems before they grow and enables them to recognize and reward employees’ recent accomplishments right away.
To prepare for an employee evaluation, managers should regularly keep notes on each worker’s performance. That way, during the evaluation it will be easy for the manager to discuss specific examples of the employee’s strengths and accomplishments, as well as any concerns.
Managers should also regularly measure each employee’s performance using appropriate metrics and be prepared to discuss the findings during the employee evaluation. Choosing the right metrics depends on the nature of the job. For example, truck drivers might be judged by their on-time delivery records while hotel managers are evaluated by their occupancy rates. Managers should be careful to choose metrics that are tied to company objectives, and each employee must know in advance what they’ll be judged on so they can align their priorities and behaviors accordingly.
It’s also a good idea to have the employee complete a self-appraisal form before the meeting so the manager and employee can review it and learn whether they see eye to eye.
To drive performance improvements and career development, the manager and employee should collaborate during the employee evaluation on employee goals. They should create a plan and timetable for follow-up meetings, providing needed resources or training, reaching milestones, and measuring success.
To complete the employee appraisal process, the manager should fill out an employee evaluation form to document what was discussed and the goals that were agreed on. This form becomes part of the employee’s permanent company record and can help guide and support future decisions about compensation, promotion, or termination.
Employee evaluations don’t have to take a lot of time and effort. Performance management software can make the process quick, easy, and paperless.