The employee appraisals and performance evaluation is a challenging task. The businesses owner, stakeholders or high-level management always wants to improve employee performance, engagements and management. The modern world is heavily data driven. The digital technologies and IT is deeply integrated in our society and also in businesses. In Dubai or anywhere in UAE the markets are very competitive and customers are also very demanding. This means it is much harder for a business to stand out of the crowed. Businesses invest a huge amount in their assets, infrastructure, production facilities, customer care and workforce. But it doesn’t mean they can obtain a competitive advantage and attract more customers. That can only be achieved if whatever resources a business have, perform at the maximum levels. Businesses and organizations strive to maximize this performance by optimizing internal businesses processes, improving the HR, actively managing employee performance and making their organizational culture more productive.
The goal of every business is to offer high quality products and services to satisfy their customers. Businesses invest a lot of resources in establishing their facilities, infrastructure, workforce and IT. However, the one key aspect of growth is the employee and their performance. Because at the end of the day it would be these employees who will be utilizing those systems and facilities. Without proper optimization of the employee performance a business cannot achieve its goals and objectives. That is why businesses use enterprise performance management and employee appraisal systems. The performance appraisal system not only help monitoring the employee performance but it also help businesses in making policies and setting up strategies for future on the bases of performance data to gradually increase the employee performance and overall productivity of the business.
What is Appraisal System?
The appraisal system is a digital tool that helps businesses in measuring the employee performance against their goals for a pre-determined time period. These goals are previously set as per the employee job roles and the high-level organizational goals and objectives. The appraisal system also helps setting up future goals and objectives and it also helps in identifying the needs of improvements, training and employee development. The appraisal system provides businesses and organizations a very comprehensive framework to manage their employees’ performance which includes both their achievements and shortfalls. The appraisal system is a strategic framework which enables businesses to easily align their high-level organizational goals and objectives with individual level employee goals and objectives to make sure all resources worked in a same direction in achieving the high-level organizational goals and objectives.
Why a Business should use an Appraisal System?
The main function of an employee performance appraisal system is to build a good relationship between the business and the employees. It enhances two-way communication and provides a platform for the employees to easily communicate with their managers. The appraisal system provides a framework which not only built confidence and improve communication but it also increase clarity and help businesses and employees to set clear expectations from each other. In addition to that it motivates employee to perform better and help businesses and employees to effectively plan for future growth. It provides regular reviews and improved communication and relationship by enabling two-way feedback. Furthermore the feedback and surveys can be conducted to get top-down, bottom-up and peer-to-peer feedback. The businesses have to understand that the appraisal system is not a monitoring tool only. In fact it is a system which helps establishing and nurturing a strong relationship between employees and their management and keep them motivated and excited about their work to achieve the higher performance. That is why the appraisal system is absolutely necessary for the businesses to grow and improve profits.
Different Types of Appraisal System
The employee performance appraisal system is a very crucial tool for a sustainable growth. The appraisal system not only provides data for the HR purposes, but it also provides data which helps managers understand the strengths and weaknesses of their teams and individual employees. The appraisal process is usually an annual process but the performance or progress of the employees can be evaluated against a pre-determined time period. Here in Dubai or anywhere else in UAE the business owners and managers often don’t put much attention to the appraisal system. However, it can be very beneficial for any business to effectively optimize their performance by adopting some of the following appraisal systems:
1. 360 Degree Feedback
The 360 degree feedback is one of the most popular and very effective appraisal system. Every employee appraisal system have features to support 360 degree feedback. There are several components of 360 degree feedback which provide different point of views and is known for most accurate non-biased performance assessments. The feedback is mainly collected from the managers, supervisors, performance reports, peers, customers and any other relevant personal to the employee. These reviews can be designed to measure several competencies and overall performance as well as performance in a particular trait either professional, personal or behavioral competency. Here are some key components of the 360 degree feedback:
Self-Appraisal: Enables employees to evaluate themselves and give them a chance to understand their strengths and weaknesses. The appraisal system provides a mechanism to collected structured data which reduce the bias and increase the accuracy.
Top-down Appraisal: The top-down appraisal is a managerial feedback which allow managers and supervisors to evaluate their sub-ordinates and provide their feedback about their performance in various traits in both personal and professional capacity.
Bottom-up Appraisal:The good appraisal systems also include a bottom-up appraisal or subordinate appraising the manager features as well. The subordinates sometimes can have a very unique and prospective which can help improving the management. Such feedback can have a huge impact on the performance and employee satisfaction.
Peer-to-peer Appraisal: The co-worker could sometime be the best evaluators. They have a very comprehensive and detailed feedback especially on skills and behavioral competencies. The peer to peer reviews are a great tool to accurately evaluate behavioral competencies as well as professional competencies and skills.
Manager Reviews:The performance reviews and feedback by the managers is the most traditional appraisal system. These reviews include feedback from the supervisor, line manager, or senior manager for an individual employees. The performance of teams, departments and groups is also evaluated by managerial reviews.
Customer Reviews: Mostly the customer reviews are feedback from the customers regarding an employee who is interacting with them. The appraisal system enables businesses to manage internal (users of product/system/IT, etc.) and external customers (your customers) separately.
The 360 degree feedback is one of the most important key factor in performance management and appraisals. It provide individual employees a clear picture of their performance and how their performance is impacting other stakeholders. Furthermore it encourages employees to focus on self-development and let them make improvements in the right direction. The 360 degree feedback also enable management to arrange and improve counselling, employee development, training and coaching programs. The 360 degree feedback increase engagement across the entire organization increase employee loyalty. A large number of local businesses, large enterprises and multinational companies are using 360 degree feedback to evaluate their employees in Dubai, UAE.
2. Management by Objectives (MBO) Appraisals
The Management by Objectives (MBO) is one of the best appraisal type to boost employee engagements. It involves individual employees in the planning process, it gives them value and make them feel important. This way employees feel more connected to the business and they focus more on self-development and improvement which boost their performance. The Management by Objectives (MBO) appraisals involves employees in the decision making and goal setting process. Which gives them confidence and a sense of responsibility hence they perform well with passion and happiness. That is why the management by objectives is an excellent way to increase employee engagement. The managers and the subordinates make plans, set objectives and make strategy to achieve those objectives which are highly aligned with the high-level organizational goals and objectives.
The objectives are validated using the SMART criteria. The SMART stands for Specific, Measureable, Achievable, Realistic, and Time bound. All the objectives should be very specific and time bound so the employees know exactly what is to be expected from them and when it should be delivered. The progress towards objectives should be quantifiable so at the end of the appraisal period both the employees and the managers can measure the performance. Most importantly the objectives should be achievable. There are many factors which can make an objective unachievable or very difficult to achieve, such as limited resources, insufficient technical capabilities, insufficient time, etc. The objective should be realistic too, because non-realistic objectives negatively impact employee performance. For example, the business wants to reduce the delivery time by 50% which is not realistic with the current logistics strength. Such objectives will result in poor interest from employees and most of the time the employees don’t even make any attempt to achieve such objectives as the know no matter what they do they can’t achieve it.
On the contrary if the objective is to reduce the delivery time by 5% in the 3rd quarter of the year or even by the end of the year. It will motivate the employees to perform well. As they would know this is achievable and realistic and with just a little more effort the objective can be achieved. That is why when the employees are involved in the process they can also provide their input and the management and employee both can agree to achieve a common goal by the end of the appraisal period. The managers and employees make plans, set milestones, and define timelines. Furthermore the employees and managers both monitor the progress and are free provide feedback, suggestion and even reevaluation can be done and the objectives can be revised accordingly to stay on course towards the high-level organizational goals and objectives. The frequent discussion about the outcome and the current progress allow managers and employees to take timely action and course correction to make sure at the end of the appraisal period the desired objectives can be achieved.
3. Behaviorally Anchored Rating Scale (BARS)
Behaviorally anchored rating scale or BARS is a non-traditional appraisal system. However, it is massively popular among all types and sizes of businesses. It help businesses understand the employees in terms of their behavior and help them quantify the impact of different behaviors on the outcome. The behaviorally anchored rating scale (BARS) is very effective in improving qualitative and quantitative performance and is very popular appraisal system. The most important thing here is that there is no rule book for this system, each BARS scale can be anchored with multiple behaviors or statement describing different behaviors that are very common among the employees. These statements are used as the measuring scale for the individual employees against their performance which is evaluated on the bases of pre-defined sets of standards that are also anchored with their individual job role. It is a relatively complicated systemand the managers and the appraisal experts should be very careful when creating different incidents and associating behavior to those incidents.
Furthermore the BARS is relatively difficult and time-consuming to create and implement. For each organization or business the BARS standards could be different which makes it very hard to take promotion and compensation decisions solely on BARS appraisal results. It also requires a lot of work and research to be done by the executives and senior managers. The behaviorally anchored rating scale appraisal system starts with identifying and creating most common incidents, which trigger a particular behavior of the employee. Then it requires a lot of efforts and testing to refine and fine tune those incidents and the associated behavior. Then the final standards and incidents can be formulate. However, the BARS is highly accurate in terms of performance analysis and it also provide a consistent evaluation which further help optimizing and improving the employee performance. The behaviorally anchored rating scare (BARS) appraisal system is used to improve the accuracy of the appraisal by focusing in most important and observable behaviors. It also help minimizing the bias and increase the fairness in the appraisal process which gain employee trust and also encourage them to perform well.
4. Human Resource Accounting or Cost Accounting Appraisals
The human resource accounting or cost accounting appraisal is a very simple appraisal system solely based on the monetary gains an employee yields for the business or organization against the cost to retain the employee. It is very straightforward system but it can overlook a lot of other performance indicators. That is why the human resource accounting or cost accounting appraisals are always used to improve the overall evaluation process rather being used as a sole appraisal system. The modern form of human resource accounting or cost accounting appraisal not just include the monetary gains VS cost of retention but it also includes several other benefits an employee is offering such as average service value, quality of the service, interpersonal relationships, and the skills of the employees and many more. The main reason to use human resource cost accounting appraisals is to accurately measure the cost and value an employee brings to the business and the financial implications of their poor performance.
The human resource accounting or cost accounting appraisals are very popular and effective among the small businesses and startups where the performance of a single employee could have huge impact on the overall business’s success. It is also a very effective appraisal system to identify the gaps between the current package of the employee and the market while also accurately measuring the monetary and non-monetary value an employee is bringing to the organization. Furthermore the businesses can utilize the human resource accounting or cost accounting appraisal for certain functions or group of employees where the progress and performance is easy to quantify in terms of revenue or financial gains. Actually it is very difficult for the HR to accurately measure the value an employee is bringing to the organization and the impact of their poor performance. However, for certain job roles such as sales, marketing, supply chain and a few other can be easy to assess with human resource cost accounting appraisal system.
5. Psychological Appraisals
The psychological appraisal system is a future-focused appraisal method used to identify the hidden potential of an employee. That is why the psychological appraisal system is very unique because it measures the employee’s future performance rather than their current or past performance. Although the psychological appraisal system is only used by big businesses, large organizations and multinational corporations, because it is expensive, time-consuming and slightly complicated. That is why the psychological appraisals are always done by a qualified psychologists. These psychologists conduct a variety of tests and could have several discussion sessions with the employees to understand their cognitive abilities, intellectual and personality traits, emotional quotient, interpersonal and leadership skills and a variety of other skills. The findings are then shared with the experts and senior managementidentify the potential of the employees and make plans for their future growth and leadership roles.
Appraisal Systems You should Avoid
We have mentioned only most popular and effective appraisal systems this far however, there are certain appraisal methods that a business should avoid. Mostly these appraisal systems were popular in the past, however, now they have been proven to be counter-productive and can have serious negative effects on the employee performance.
Stack Ranking Appraisals: This is most controversial but still commonly used performance appraisal system. When ranking employees against each other and forcing managers to stack them in performance tiers, it could have negative impact on the employees, especially the employees placed in poor performance group got demotivated.
Forced Choice Method: The forced choice appraisal system provide the reviewer with only a limited number of options, usually just binary – true or false. The reviewer is forced to make a choice, which completely discard the discussion about circumstantial evidences or exclusivity of the situation during the appraisal period.
Essay Appraisals: In this system the reviewers/managers are provided with open-ended questions or asked to write down a performance analysis in form of an essay. This system doesn’t provide quantifiable reporting data which make it extremely difficult for the HR to make comparisons or use it in their decision making process. Furthermore the writing abilities of the reviewer and the personal bias can also reduce the accuracy and in fact it can harm employees too.
Field Review Appraisals: This is a very old appraisal system and it requires someone from the outside of the employee’s department, usually from the corporate head office or the HR who observe employee for a certain time period to evaluate their performance in terms of professional and behavioral competencies. However, it is very obvious that employee’s behavior gets changed under the knowledge of observation and it is also very difficult for the reviewer to completely understand the context, and actual behavior of the employees.
Rating Scale Based Appraisals: A simple or graphical rating scale is used to review the performance on a scale of 1 to 5. The reviewer is asked to rate the employee against pre-defined traits such as capability, timeliness, leadership, and various abilities. The biggest drawback of this system is that it only measures performance at the time of the rating and doesn’t completely neglect previous performances and sometime even context too which cause dissatisfaction amongst the employees and demoralize them instead of improving their performance.
The employee appraisals and performance management is very tricky and reviewers and managers could easily get it wrong. Sometimes despite the reviewers excellent ability to implement the appraisal system correctly doesn’t also produce desired results and that is because the system itself is incapable. These are some employee appraisal systems that each business should avoid. However, the stack ranking is somewhat applicable for the modern consultancy firms, law firms and such business models.
Conclusion
Employees are a most valuable asset of any business. It is absolutely necessary for business to establish and nurture their relationship with their employees to ensure a long term success. Every business have a vision and that vision helps them lay down the goals and strategies to achieve their vision. The high-level organizational goals and objectives later scaled down to the individual goals and objectives. Each employee is hired for a particular job role. Their job role defined the expectations from them. Similarly their goals and objectives are also relevant to their job role, skills and capabilities. It is extremely important to keep your employees motivated and ambitious. The employee performance can make a huge difference, whether it is your customer care, your sales team, production department, HR or strategic planning department and higher management. Everyone has to be driven to perform well in the direction of long term organizational goals and objectives.
However this is not an easy task. That is why businesses use a performance appraisal system. The system help them track and monitor performance, provide business intelligence data and a better understanding of the employees’ strengths, weaknesses and obstacles that might be preventing them to perform better. This information is vital to improve the workforce and achieve higher efficiency, performance and productivity which drive profitability and help generating more revenue for the business. RSI Concepts is a leading customized employee performance appraisal system development company in Dubai, UAE. If you want to learn more about the subject or want our help to build you a high-quality appraisal system? Please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.
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