Assessment of employee performance: methods and evaluation criteria

The success and stability of any company depend on the efficiency of its employees. Some people genuinely earn their salaries, while others create the appearance of active work while attending to personal matters. Assessing the effectiveness of personnel helps determine how each employee’s actions impact the company’s productivity. It demonstrates how well an employee matches their position and whether their salary level corresponds to their contribution to the company’s development.

Why Assess Employee Efficiency

According to statistics, 70% of company employees are constantly distracted from their work processes. The use of messengers, social networks, and personal calls during working hours all hinder the ability to focus on their core responsibilities. Only 40% of employees understand the essence of the tasks assigned to them by their supervisors. As a result, companies lose 20 to 30% of their revenue annually due to this inefficiency.

To avoid losses caused by the irrational use of labor resources, employee efficiency assessment is applied. It is a system of criteria that determines how well a person fits their position and how they handle their assigned tasks. Studying employee productivity is beneficial not only to managers but also to the employees themselves.

“Assessing Employee Efficiency: Why It Matters

During the research, the following factors are taken into account:

1. The volume of work performed by the employee.
2. The complexity of the tasks.
3. Compliance of the tasks performed with job responsibilities.
4. The results of the work and the time spent on its completion.
5. Resources expended.

Assessing employees helps achieve the following goals:

1. Determine the skills, abilities, and professional level of employees.
2. Make the right personnel changes.
3. Improve the existing KPI (Key Performance Indicator) and motivation system within the company.
4. Eliminate chaos and disorder in the workforce.

Based on the results of employee assessments, various strategic decisions can be made that have the potential to benefit the company. For example:

1. Develop a promotion matrix for employees.
2. Create a checklist system based on the actual level of employee knowledge.
3. Establish a plan for employee training and development, including agreements with training organizations.
4. Identify candidates for managerial positions who can grow from line workers into competent leaders.
5. Analyze work processes and identify weaknesses in the company’s business strategy.

Preliminary personnel assessment is necessary, especially when a company experiences constant employee turnover or a decrease in labor productivity. It is also essential when employees complain about poor working conditions, disrespectful treatment, or low salaries.

Employee assessment is performed in the following cases:

1. In workforce planning.
2. When hiring new personnel for the company.
3. During training and development programs for managers.
4. To establish a talent pool.

Analyzing indicators that characterize the efficiency of personnel usage allows the company to hire people with the required qualifications, knowledge, and abilities, significantly reducing expenses on recruitment agencies and the number of job interviews.

Improving the efficiency of each employee can be achieved through:

1. Mutual commitment to work. To ensure that every team member works to their full potential, the manager should outline opportunities for growth and reward employees with bonuses or incentives. This creates a positive outcome for both parties: employees improve their well-being, and the organization gains additional profit through the rational use of labor resources.
2. Transforming personal interests of subordinates into a tool for increasing their efficiency. Understanding each individual’s interests can be used as a motivation tool.
3. The manager’s interest in the success of employees. When team members feel valued and essential to the company, they will put in their best effort to justify the trust placed in them.
4. Creating a comfortable work environment.

It is essential to regularly assess the competence and quality of employees’ work. This is understood by every business representative. However, the question remains: how to do it correctly? After all, a person can perform their duties well but constantly distract colleagues, seeking their help, or fail to meet established deadlines. For this reason, the effectiveness of each employee is determined based on multiple indicators, including labor costs and time spent on work.

In Japan, for example, this indicator is determined based on each employee’s abilities.

Based on the assessment of employee performance, companies develop bonus and reward systems and make decisions about promoting employees to new positions or terminating their employment.”

“Evaluation Criteria for Employee Performance

To properly assess an employee’s efficiency, it is necessary to consider their work-related, personal, and behavioral characteristics. Evaluation criteria are developed in collaboration between company managers and HR representatives or with the employees themselves.

Collaboratively developing evaluation criteria has several advantages for the company. They are more understandable to management and employees, do not lead to resistance from employees, and are based on the specifics of each individual work process.

Evaluation criteria can be categorized based on their scope, assessment method, and objectivity into:

1. General organizational and specialized.
2. Quantitative (assessing achieved results) or qualitative (considering individual employee qualities and the quality of their work).
3. Objective (standards established for each work process) or subjective (formed based on expert opinions).
4. Integral or simple.

The development of evaluation criteria begins with identifying a list of job positions. Then, the functional responsibilities of the selected groups are determined. The feasibility of applying criteria for each specific case is analyzed. The amount of information about the object of study is taken into account, the importance of each evaluation criterion is clarified, and it is adjusted to fit the peculiarities of each specific work process.

Competency Assessment

This assesses the professional, personal qualities, and knowledge of employees, including:

1. Professional skills, which are assessed based on tests, exams, compliance with industry standards.
2. Communication skills, which help determine an employee’s position in the team, whether they are a leader or an outsider, whether they have conflicts with colleagues, and their loyalty to coworkers. This information can be obtained through psychological tests and interviews conducted by the HR department.

Competency assessment also includes the execution of job responsibilities, work attitude, work discipline, and loyalty to the company.

Employee Performance

The results of each employee’s work are compared to the benchmarks set for their position. Before assessing an employee’s performance, specific tasks are assigned to them. Performance is measured in terms of sales volume for a month, the number of completed projects, or deals closed during the reporting period.

Key Performance Indicators (KPI) are expressed as a percentage and include:

• Sales divided by the number of processed calls.
• The number of repeat customer inquiries divided by the total number in the customer base.
• Results achieved divided by the resources expended.

To evaluate performance using KPI, a table is used, divided into two columns. In one column, evaluation criteria (quantitative or qualitative, individual or team-related) are recorded. In the second column, competencies approved for that position are indicated. The head of the department assigns numeric values of 0 or 1 to the selected indicators, based on their own observations. The numeric values in each row of the table should sum up to one.

KPI indicators have three levels:

• Basic (the starting point from which the result is counted).
• Normal (mandatory under any circumstances).
• Target or ideal (all employees should strive for this).

KPI indicators are evaluated at the end of the reporting period. The assessment of qualitative values is made on a 100-point scale, while quantitative indicators are measured using a metric system. To determine an employee’s specific performance, the following formula is used:

(Actual data minus basic KPI / Normal minus basic) × 100% = result in percentage.

The obtained data show how much the employee has met or exceeded the norm set for them. If the KPI is above 100%, the employee’s performance is high. If this parameter is below 100%, it indicates that the staff is not working efficiently.

Each organization develops its own evaluation criteria, taking into account its specific characteristics.

Methods for Employee Performance Evaluation

Various methods are used to determine the effectiveness of employees in a company. They can be categorized based on their direction and assessment approach as follows:

Qualitative Methods (Descriptive):

1. Matrix Method: Employee characteristics are compared to a standard model corresponding to their position.
2. Task Performance Evaluation: Assesses how well an employee is performing their job.
3. Critical-Incident Method: A list of employee achievements and shortcomings is compiled, and conclusions about their professional suitability are drawn.
4. 360-Degree Feedback: Employee performance is evaluated by colleagues at work, their immediate supervisor, and the employee themselves. Information about the employee is gathered through a questionnaire consisting of questions divided into separate sections related to the employee’s performance.
5. Group Discussion: Conducted in the form of a direct discussion of the employee’s work results with management and invited experts. By using this method, the stress resistance of the employee, communication skills with both staff and management, can be visually assessed. Questions can be asked by both parties during the discussion.

Quantitative Methods:

1. Rating Method: Employees receive scores for their work on a 10- or 5-point scale, which are then aggregated and analyzed at the end of the reporting period.
2. Free Rating Method: An expert committee assesses the qualifications, skills, and characteristics of the employee, and the overall rating is based on their assessment.
3. Ranking Method: A commission of department heads creates a unique ranking of employees based on their performance and usefulness. After comparing data from different sources, employees at the bottom of the list may be dismissed or transferred to lower-paying positions.

Combined Methods:

1. Summative Rating Method: All employee characteristics are evaluated on a predetermined scale. The average score is calculated based on the collected data, which is then compared to the benchmark set for the position.
2. Grouping System: Employees are grouped into categories based on their performance, such as leaders, average performers, and underperformers. Decisions are then made regarding promotions or transfers.

These methods may provide an incomplete assessment of employee performance or their socio-psychological qualities. Therefore, in recent times, comprehensive methods based on a combination of all evaluation approaches have gained popularity.

Competency Assessment Methods:

These methods are used to conduct an in-depth analysis of employees’ professional qualities to effectively utilize a company’s human resources. They help calculate ways to increase labor productivity within the company and develop measures to reduce costs associated with the employment of incompetent workers. The following methods fall under this category:

1. Certification: Involves the evaluation of an employee’s qualifications, practical and theoretical skills, as well as an analysis of their work results, personality traits, and professional characteristics. Certification is carried out based on standards established for each position and profession, with a frequency of once a year, once every six months, or once a year. The company’s management has the right to certify all employees, except top managers, employees with less than one year of experience, or pregnant employees.
2. Assessment Center: Comprises three stages: preparation, scenario development, and the assessment process itself. The assessment includes business games, group discussions, interviews, and tests. This method provides an objective picture of how the staff corresponds to the goals, structure, and policies of the company but is primarily used in large companies due to its complexity.
3. Testing: Conducted based on professional and psychological tests to assess an employee’s level of knowledge, their suitability for their position, and their personality traits.
4. Interviews: A series of questions is prepared for the employee to answer. Interviews can be conducted in an unstructured or structured format. The most effective method is a structured behavioral interview that allows the candidate for a position to simulate a specific situation from their professional activities, find a solution to it, and evaluate their role.
5. Expert Assessment: Professional and personal qualities of employees are evaluated by external or in-house specialists.
6. Business Games: A model of a real business situation is created. During the game, employees demonstrate their professional and personal qualities, teamwork skills, stress resistance, and ability to react quickly to changes in the work situation.

By applying these methods to assess employee effectiveness, it is important that they are objective and understandable.

Using the LeaderTask Program for Employee Performance Evaluation

Assessing the performance and productivity of company employees is a complex process that requires significant time and patience from managerial staff. To make the work of employees successful, it is important to set clear and achievable goals for them, monitor task execution, and provide appropriate evaluations of their actions.

A reliable tool for organizing the work time of personnel is specialized software designed to systematize and efficiently solve various tasks. For example, the modern planner LeaderTask.

The key to the successful operation of any team is the rational distribution of tasks to competent employees. To achieve efficiency from employees, it is necessary to:

• Assign them tasks that match their professional skills, abilities, and experience.
• Empower employees with authority that corresponds to their rank.
• Appoint a leader for each group.

The usefulness and effectiveness of employees need to be monitored. This can be conveniently done with LeaderTask tools:

• A convenient task setting and control system. Adding a task to the system, assigning responsibility, and setting a deadline can be done in a few clicks.
• Clear visualization of employee effectiveness. Managers can view the results of each employee’s activities on graphs or in statistical reports and draw appropriate conclusions.
• Prioritization of tasks. Important tasks are assigned a special status, allowing employees to focus on essential assignments, thus enhancing productivity.

The application’s functionality also includes features such as task execution control, organizer, task planner for iPhone, and other devices. By using the program, you can avoid the loss of important information and unnecessary time spent on key business processes, making the task execution process clear and accessible to all employees.

Conclusion

The role of the HR department and company leadership is not limited to assessing the effectiveness of employee work, identifying “problem areas,” and dismissing incompetent specialists. To achieve positive results from subordinates, it is essential to offer them transparent and mutually beneficial collaboration in return. The evaluation of employee performance should take the form of constructive dialogue that benefits both parties.

The results of the assessment are documented in reports or tables that provide detailed information about the employee. Based on this information, management makes decisions about their continued employment within the company.

There are various methods for assessing performance, each with its own strengths and weaknesses. Therefore, when choosing an assessment method, it is important to consider factors such as the company’s personnel structure, the specific nature of its activities, and the relationships among employees.