Most people dream about owning a business and being their own boss. However, as an employer, you need to do some things that may not be as much fun as you’d anticipated, one of them being employee evaluation.

performance evaluation
Source: Zoho

Before you go through all of that, it would help to understand why you need to evaluate performance and how to do it effectively.

Key Takeaways

  • Assessing your team’s performance is essential for business growth and employee engagement because it identifies issues and challenges that can be detrimental to both
  • Performance evaluation can streamline promotions and salary increases while highlighting training needs and areas where disciplinary actions may be required
  • The best way to assess team and employee performance is to gather as much information as possible
  • Software tools can help with performance analysis and information gathering

Why Are Team Performance Assessments Important for Your Business?

“Wow, I’m so excited for my performance review today.” Said no one ever. That sums up the tone for an activity that’s no doubt essential yet ultimately a thankless task.

Assessing your team’s performance requires going back over everything your team did on a project and ticking boxes for each team member to see if they pulled their weight or pulled the team down.

If they pulled their weight, invariably you compare their performance against their peers, which can cause resentment. If they pulled the team down, you need to take steps to correct the issue, which might require some tough decisions and actions like letting someone go.

Performance Appraisals Should Be Simple

However, performance appraisals don’t always need to be tedious and time-consuming. You can use performance appraisal software to automate the most tedious tasks of assessing your team’s performance, such as collecting data and tracking the progress of individual employees. Zoho People, for example, has a performance management module that allows ongoing performance tracking, multirater reviews, and self-appraisals.

With everyone on the team putting their two cents in, so to speak, you can make your performance assessments more well-rounded and perceived as fair. With software in the picture, it isn’t just you who makes the assessments, so your employees are less likely to be resentful or disengaged.

It would be rather wishful thinking for an employer to expect their teams to start working together as smoothly as they’d like. In most cases, your employees begin as strangers, gradually getting to know each other and their strengths and weaknesses.

For example, one employee may turn out to be very reliable but slow, while another can be brilliant but erratic. Together they might complement each other and make a good tandem.

However, you can’t leave it to chance or gut feeling. Assessing your team’s performance forms part of best human resources (HR) practices for small businesses for a reason.

What Performance Reviews Tell You

Formal employee evaluation gives you the information you need to help your employees improve individually and as a team. Underperforming team members might need additional training or a different management style. You can also find that some people are simply not a good fit for your business.

How will you know if you don’t check? You can think of performance assessments as constantly beta testing your HR.

Performance analysis also lets your employees find out how they measure up. People seldom clearly understand their own strengths and weaknesses. An objective evaluation gives them that.

It also identifies a person’s progress and areas of improvement to bring out the best in them. This benefits everyone on the team in the end.

You can use performance assessment as a basis for promotions, salary increases, training, disciplinary action, and more.

Promotions

Which of your employees are up to the challenge of taking on more responsibilities in the company? You can find that out by tracking their performance and noting improvements in knowledge, skill sets, participation, and initiative. If they can advance the goals and vision of your business, they may be prepared to handle critical roles.

Performance tracking also helps you justify your choice when several qualified employees are vying for the same role.

Salary Increases

Private companies have no obligation to increase employee salaries regularly. On the other hand, retaining employees is hard if employers don’t give them the compensation they deserve.

Assessing individual performance can help you decide who deserves a raise and how much, and whether some people should receive bonuses for exceptional achievements.

Training

Performance assessment isn’t only about rewarding achievers and monitoring underperformers. It’s also about looking for trends and patterns to identify problems and issues that training can solve.

When you invest in upskilling and retraining the right employees, they feel you’re committed to them. Employees engage more when they think you’re rooting for them, encouraging them to try harder and be more productive.

Additionally, assessing your team’s performance also shows individual employees if they’re progressing in their careers. That can help them form goals within the company.

Disciplinary Action

On the flip side, you can’t afford to have slackers and incompetent people stay on the team. They unmotivate your other employees and send out the wrong message that people get away with underperforming. Therefore, you have to take disciplinary action when necessary to keep teams working at their peak.

Formal performance assessments identify employees that are habitually late, underperforming, disobedient, or otherwise disruptive in the workplace. These documented appraisals also serve as legal justification for any disciplinary action you might take, leading up to and including dismissal.

Tips for Assessing Your Team’s Performance

Whether you use software to conduct performance analysis or not, you still need to gather information to do a proper assessment. The following tips can help you assess your team’s performance effectively.

1. Establish Company Goals

Before starting a performance assessment, you need to establish goals and ensure everyone knows them. How else will the team know what and how to accomplish them?

For example, if your company is in e-commerce, set revenue goals for each product category. You can then see how much each employee contributed to achieving those goals and make appropriate conclusions.

2. Get Feedback

Involving employees in assessing the group gives you a 360-degree view of the entire ecosystem of your company. It lets you focus on the numbers and gather valuable insight into the people generating those numbers.

Arrange a huddle for the whole team and individual members to get a feel of their dynamics. They might not tell you all their thoughts or feelings in either case, but even what they don’t say can give you clues about how well the team works together.

You can also use online survey forms if you feel that a face-to-face interview (even virtually) might not get you all the information you need. Zoho Survey has a free version that has much to offer.

online survey form
Source: Zoho

You can combine online survey results with interviews to get a complete picture of what’s happening with your employees.

3. Pay Attention

Individual interviews also help you get insights into the issues and concerns that need addressing, but only if you listen objectively. Disregard any biases you may have about the employee or issue and avoid getting defensive.

Employees are typically reluctant to give their thoughts and opinions to their employers, so make a point of coming into an interview with an open mind and making them feel comfortable. Compare what people say about themselves and others to draw conclusions about the changes you need to improve productivity and engagement.

4. Take Notes

Sitting down to a cozy chat with the team or individual employees is an excellent way to establish relationships, but keep in mind that isn’t your goal when doing assessments. It would be best to take down everything of note said (and not said) about the challenges and issues they face in a project or the workplace in general.

The documentation may reveal issues that most employees agree are problems. Some may be something you can fix, such as unrealistic revenue goals or too-tight deadlines. Others might require something more fundamental, such as switching employee roles to fit their skill sets better.

5. Act on Actionable Insights

The whole point of performance analysis, which is necessarily hindsight, is to help you make better decisions in the future. Assessing your team’s performance is a waste of time if you don’t act on the information and insights you get from it. Use what you find out from your analysis to set up a more conducive and productive work environment.

What to Do Next?

Accept that assessing your team’s performance is necessary to grow your company and improve employee engagement. You can do it manually or use software tools to document your evaluations better. Either way, you need to do it, starting immediately.

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