Regular meetings with employees in order to jointly set goals and discuss their progress are an effective way of motivating the team and improving the efficiency of the entire organization. Unfortunately, in many organizations, a performance review is simply a regular process that, both from the perspective of the employee and the supervisors, carries no real value. How to conduct performance evaluations in a way which positively influences efficiency and commitment?

This article will explain the following:

  • What is the function of the annual performance review in the organization?
  • How is employee evaluation perceived by employees and managers?
  • What to do to make employee evaluations translate into commitment and effectiveness?

Why is employee evaluation important?

Employee appraisal is one of the key elements of the human capital management process in an organization. It allows companies to effectively monitor the progress made by employees and evaluate the level of individual goal achievement. If the organization manages to design and effectively implement a good employee appraisal system, tangible benefits will be seen by both parties.

From an employee’s perspective, a well-designed evaluation process is an opportunity to gain insight into their progress, strengths and weaknesses, achievements that have been noticed by supervisors, and shortcomings that should be avoided in the future. As a result, when they are clear about what is expected of them, employees stop being unsure and engaging in various activities chaotically. They are able to precisely set a development path that will increase the chance of vertical or horizontal promotion. What’s more, their motivation and, consequently, effectiveness increase.

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The annual evaluation also brings a number of benefits to the organization itself. Above all, it allows companies to effectively select the best employees, support their development, and assign them increasingly responsible tasks. In other words, to keep real talents in the structure of the company, strengthen the foundations of the organization, and create optimal conditions for dynamic growth. The annual evaluation also makes it possible to diagnose problems in the company – competency gaps, poorly planned processes, or other shortcomings.

However, in order for the benefits presented above to have a chance to occur, the company must design and implement an effective employee evaluation system. As statistics show, this is not as easy a task as it might seem. According to Mercer’s 2019 Global Performance Management Study Insights: Performance Transformation in the Future of Work [1], only 2% of companies believe that their approach to performance management brings measurable benefits. This is also confirmed by the conclusions of the Gartner study [2], which shows that as many as 96% of managers are dissatisfied with the current performance management strategy of their organization.

What is evaluated?

Employee evaluation criteria are set individually by each organization. This is due to the fact that a properly designed employee evaluation system should be determined by many factors, including the type of business, the size of the company, as well as its strategic goals. The management methods used should also be taken into account.

Taking the above into account, different elements will be significant in the process of employee appraisal in a large production plant, and different in a small technology company. However, there are several areas that are reviewed in almost every organization. These include the following:

  • correctness/quality of performed tasks,
  • timeliness,
  • work organization,
  • autonomy,
  • knowledge and competencies,
  • creativity,
  • communicativeness,
  • cooperation,
  • professional ethics.

How often to perform employee evaluations?

In most organizations, employee appraisals are made on an annual basis, but this does not mean it is carried out once a year. It is an ongoing process that begins with the joint setting of goals, which are then discussed with immediate supervisors at regular meetings. The so-called semi-annual review has become standard in many organizations. It allows the employee to find out whether he or she is going in the right direction and whether the quality of his/her work is in line with the expectations of the supervisor and the organization.

It’s undeniable that frequent meetings are time-consuming. Therefore, most organizations decide to conduct a semi-annual or even quarterly evaluation of their goals. This frequency allows employees to stay motivated and, at the same time, to receive feedback quickly enough to improve or adapt before obtaining the final, end-of-year evaluation.

It should be emphasized, however, that it is often an individual matter. Some employees, especially younger ones, may require more frequent meetings. More frequent meetings should also be initiated when the employee’s results significantly deviate from the jointly set goals.

Methods of evaluation

Employee evaluation is carried out in many ways, but as a rule, it can be classified into two groups:

Absolute methods – the employee is evaluated on the basis of the results achieved, then compared with the established norms or standards (e.g. employee evaluation form, descriptive evaluation, 360° evaluation, etc.);

Relative methods – the employee is reviewed by comparison with other employees (e.g. rankings, pairwise comparison, etc.).

In many organizations, especially smaller ones, a spreadsheet is a typical evaluation tool. It provides a way to efficiently collect information about employees and their results, but it is a manual and time-consuming technique. A modern platform for employee evaluation significantly simplifies the task and saves a lot of time.

As long as the company has an LMS (Learning Management System) platform, it can use it to obtain a lot of valuable information about employees, for example, about timeliness and discipline in terms of mandatory training (e.g. OHS), as well as the results obtained during tests and other knowledge checks. Additional training provided by the employee allows, in turn, to assess his or her interests and potential for development.

A modern learning management system makes it possible to quickly verify such information, generate an appropriate report, and compare the performance of employees working in the same team or in equivalent positions. Such a form of process automation saves a lot of valuable time, which is otherwise worth spending on meetings with employees.

How to share evaluation results with employees?

The annual evaluation process should end with an individual conversation between the superior and the employee – informing the latter about evaluation results by e-mail or in any other way isn’t a good idea. However, the meeting should not be too formal and shouldn’t consist only in providing brief information or the evaluation itself. It is important to provide the employee with information about both their strengths and weaknesses – to identify key achievements and possible failures that justify the score given.

It should be emphasized that providing employees with evaluation results should not take the form of a monolog. The reviewed person should be able to express his or her opinion, present their point of view, or even express their dissatisfaction with the review.

What is the result of the employee evaluation?

Employee appraisal generally has two basic functions – evaluation and development.

The former is to provide the employee with feedback on the quality of their work. Organizations often use a multi-level evaluation scale that directly shows whether the employee met the expectations set by the company, exceeded them or whether the results were below these expectations. In general, the obtained grade translates into the employee’s finances – it affects any awards and bonuses, and often also the base salary. A high rating also frequently increases the chance of promotion.

The latter function, in turn, consists in determining the training needs of the employee, their strengths and weaknesses, as well as development potential. The annual appraisal thus serves an important role from the perspective of the organization.


  1. 2019 Global Performance Management Study Insights: Performance Transformation in the Future of Work
  2. Gartner
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