Effectively Measuring Employee Performance
As the year winds down, many business owners will be assessing the successes of 2014, as well as the areas where the company could have performed better. This process involves looking at your workforce, and identifying staff members who worked particularly well over the last 12 months – and those who show room for improvement. But too many SMEs still neglect performance management, and, because they often lack a human resources function, fail to conduct any form of staff evaluation. What are the steps to measuring the effectiveness of your workers? And how can you boost the productivity of employees who are currently operating below par?
Why undertake employee appraisals?
An important reason for introducing a formal system of employee assessment is to ensure you know what your workers are thinking about their job, as well as informing them of your expectations of them. The fundamental purpose of this is to get the maximum performance from your team. Failing to undergo this type of analysis can mean bad behaviour and inefficiency is allowed to go unchecked, much to the detriment of a business.
Regular assessments – typically every six months or at least once a year – can deliver a number of benefits both to the employer and the employee:
- Staff who communicate properly with their senior managers tend to be more motivated, and are less likely to look for work elsewhere.
- Problems within the business are often brought to light at an earlier stage than would otherwise be the case, and can be dealt with before they become a real issue.
- Workers can be given goals to achieve, as well as guidance on how to achieve these targets. It’s an opportunity for managers to explain plans for the business, and why it’s doing what it’s doing.
- Areas where staff may need extra training can be revealed by the appraisal process, therefore employees are helped to become more efficient in their work.
- There is a direct relation between effective staff appraisals and worker development programmes, and employee performance and engagement, according to research from the Chartered Institute of Personnel and Development (CIPD). In other words, well managed workers who get the opportunity to talk to their bosses openly are more likely to do a better job, and be loyal to the firm.
What to measure – and how
Are there any objectives you’ve set for a member of staff in the past? If so, this is a great place to start analysing whether the person has met these previously agreed targets. You might also look at hard, measurable figures, such as levels of sales, production units, or the amount of orders an individual has processed. But these numbers shouldn’t be judged in isolation. You need to think about quality, efficiency, and effectiveness, too. Talk to the employee about anything that has affected their ability to fulfill their role. There may be things beyond their control having a significant impact on their performance.
Obviously, if someone has had a lot of time off due to illness lately, you may question whether they’ve had a particularly unlucky run of sickness, or if they’re unhappy – either professionally or personally. But it’s vital to treat such enquiries with sensitivity. The purpose is to understand what’s happening to help a person do their job better, and with greater satisfaction – not to persecute them for taking days off. Trust is an important element in an employer-worker relationship, and clumsy management can easily wreck it. Almost half of employees say they’re nervous about phoning in sick even when they’re genuinely ill for fear of the boss’s response, according to insurer Axa PPP. The Health and Safety Executive offers SMEs guidance on how to manage sickness absence on its website.
Increasingly, many businesses turn to software packages for help with employee assessment. There are a wealth of programmes available that will conduct 360-degree appraisals of staff online, though these still usually require human intervention to make sense of what the algorithms say. Such systems can be very insightful, but many SMEs still mostly rely on a face-to-face meeting to figure out how well employees are doing. This also gives the staff member the opportunity to cite what they think have been their greatest achievements of late. Make it a relaxed, frank, and honest conversation, being careful to talk about actual events, examples of successes, and specific failures, rather than getting side-tracked into personality issues or blame. Prepare an agenda for the chat, so that the employee feels they have the chance to cover everything of note, and start quite generally, before drilling down into the detail of their work.
Setting future objectives
Once you’ve weighed up how a worker has been performing in the recent past, you need to agree with him or her work goals for the future. Setting these targets will involve several stages:
- What do you want the employee’s department or specific function to achieve in the next year? Identify and agree these key objectives with the person, discussing your common aims.
- How will those newly agreed goals be translated into activities? Decide what processes are likely to be required to make the plans a reality in the months to come.
- Decide with your employee how you will measure the success of the outcome. What will be the indicators of progress, and what are the practical ways you’ll determine how effective he or she has been? Agree at what level the ultimate target really sits.
- Keep an eye on these objectives over the coming months, checking in with your staff at regular intervals to see how they’re coping, rather than saving up your conversations for the formal appraisal meeting. This will allow you both to tweak behaviour, and revise approaches to work challenges to get the best result.
If you’ve tackled the task well, your employee should walk away from the appraisal feeling optimistic about the future, even if they have areas of work to address. It’s meant to be a constructive exercise in identifying their strengths and weaknesses, giving praise and acknowledgement where it’s due, and offering solutions to help them be better in their job where they’re currently struggling. If you want to get a better idea of what more your company could be doing to manage and develop its staff, the CIPD has a free online tool that SME owners can try. Managing your staff in this way isn’t a luxury – it’s a necessity that can make the difference between an okay enterprise, and a great one. So, be a better boss as you go into 2015, and make staff appraisals an integral part of your business operation.