employee performance appraisal system Archives - RSI Concepts - Top IT Solution Provider Company in Dubai, UAE

September 5, 2024

Data-Driven Decision Making in Performance Management

For any growing business the biggest challenge is to optimize the cost and performance while ensuring maximum customer satisfaction. Although that might seem a very simple concept, but that is way more complex and sophisticated. When it comes to manage human resource and optimization of operational efficiency, the HR department plays a crucial role. The HR is basically responsible for hiring and retaining right talent, ensuring the required skillset is always available for the organization and the HR is also responsible for leveraging the true potential of the workforce.

For that the HR and business leaders adopt various practices and solutions. The performance management system or employee performance appraisal system is a digital solution which collects and analyze performance data and produce actionable insights. This performance insights help businesses optimize employee performance, align them with strategic goals and objectives, and increase employee loyalty.

Data-Driven Decision Making in Performance Management

What is a Performance Management System?

A modern performance management system or employee performance appraisal system is a structured framework and combination of processes and techniques aided by a specialized software application. Typically the HR team and business leaders have to go through a lengthy and difficult manual process to perform performance appraisals at the end of the term. This involves multiple processes and human efforts and cost. Therefore businesses and organizations who follow traditional performance management practices tend to have annual review process or biannual at maximum.

However, the market landscape is changing rapidly, and businesses need a robust, efficient and cost-effective way to evaluate performance. Moreover the performance management itself has evolved a lot, the annual reviews and appraisal practices are no longer effective, and both the employees, managers and most of the business leaders lost their faith on annual evaluations or reviews.

What is a Performance Management System?

The present day performance management system and practices are focused more on continuous performance management, instead of taking it as an annual exercise. The modern performance management systems are also focusing a lot on employee engagements and well-beings. The modern performance management system heavily rely on AI-driven performance management software. This software is a key tool to collect large volume of performance data. The performance management system software comes with in-built data collection tools, KPI setup mechanisms, communication management tools and countless other features which empower management and also help automating various processes and workflows of performance management.

The performance management system not only make the process efficiency and effective, but it also offers innovative tools for both individual employees, and managers. All these features help aligning employees with organizational objectives and boost staff performance.

The performance management system software comes with in-built data collection tools.

What is the Role of Data-Driven Decisions in the Modern Performance Management?

The traditional performance management processes heavily rely on personal opinion and subjective reviews. This approach not only allow personal bias but also degrade the transparency of the entire system. Another biggest flaw with the traditional performance management system was the discontinuity. The performance appraisals and reviews were taken as an annual exercise such as accounts audit. This makes traditional performance management more ineffective.

Furthermore the overall market landscape is becoming more competitive and businesses are transitioning into a new customer-centric business era where the customer demands and expectations are placed at top or every strategy. This businesses need to respond to changes quickly and efficiently, they need to be more innovative and effective to gain competitive edge and so on. All this requires a highly effective and efficient decision making process and the data-driven decisions are considered to be the lifeline for the growth and progress in present times.

What is the Role of Data-Driven Decisions in the Modern Performance Management?

Performance management is all about aligning the staff with the high-level organizational objectives and goals. This is done by continuously monitoring performance, altering strategies, course correction, and strong decision making process. The data-driven decision making is a universal process where all the decisions are based on the data, facts, insights, and accurate information gathered through various channels, and sources. When it comes to performance management the performance data is crucial for decision making.

Business leaders, management and/or HR needs precise and in-depth data to ensure successful decisions. Without accurate performance data businesses can’t identify areas of improvement, employee’s pain points, training needs and various other aspects which are essential for performance management. That is why the data-driven decision are absolutely essential in performance management and overall success and progress of a business.

Key Advantages of Data-Driven Decision Making in Performance Management

The performance management is all about taking accurate and timely decision to make sure your workforce and all available resources are always aligned with the high-level organizational goals and objectives. In the modern business landscape the traditional business processes, practices and approaches have greatly transformed. Now a day’s businesses are facing many challenges one of the most critical is to deal with rapid changes in the market landscape. The customer demands, the market trends, and competitors are evolving rapidly.

This demands a highly proactive approach and superior responsiveness. And the performance management system plays a crucial role in making businesses efficient, robust, proactive and profitable. A digital performance management system provides a full-fledge framework to manage performance and first and foremost advantage of data-driven decisions is the highly accurate evaluation and performance insights.

Key Advantages of Data-Driven Decision Making in Performance Management

Moreover the data-driven decisions help businesses to continuously improve their operations and employee performance. The data-driven decision making plays crucial role in improving and elevating individual performance as well as the overall performance of the organizations and operational excellence which lead to better products/services and enhanced customer experience. Here are some key advantages of data-driven decision making in performance management system:

Objective Performance Evaluation:
The data-driven decisions eliminate bias and subjectivity from the performance reviews and it also have positive impact on communication and engagements. The HR decisions are based on employee KPIs, OKRs, accurate measure of their productivity, contribution, goal alignment and achievements. The performance data also ensures that the performance benchmarks are tracked accurately and aligned with organization’s standards.
Personalized Employee Development Programs:
For any performance management system the employee development and enhancing their competencies is the most important part. The performance data provides in-depth insight to individual employee’s strengths, weaknesses, behavioral and professional competencies. This help HR to design and execute personalized employee development programs which also help increasing employee engagements.
Elevated Efficiency and Productivity:
One of the biggest obstacle in the employee performance is short sighting on how employees are spending their time. However, with the performance data the managers and HR can easily understand this and the inefficiencies of workflows, tools, and business processes. This can greatly elevate employee productivity and efficiency. This also help setting up SMART goals which keep employees more focused and productive.
Better Employee Engagements:
The employee engagements are the pillar of modern performance management systems. Businesses leaders and HR are eagerly seeking ways and approaches to maximize employee engagements. The engaged employees feel more valued, connected with organizational success, and have a strong professional and emotional bond with the organization. The performance data helps to set up clear career paths and fair reward programs which increase employee engagements and loyalty.
Higher Alignment with Organizational Goals:
The primary purpose of any performance management system is to align the employees and resources with the high-level organizational goals and objectives. The performance data help businesses link individual employee performance with organization-wide metrics, this highlights the individual contribution and impact on the overall performance. It also help aligning the individual employee goals and objectives with the high-level organizational goals and objectives.
Proactive Performance Management:
The proactive performance management is one of the most effective approach for modern day performance management. That is only possible with highly accurate and in-depth performance data. The performance data help managers to identify the obstacles and problems at early stage and even in some cases before they start impacting the performance. This way managers can prevent any impact on productivity and efficiency. The continuous feedbacks and reviews are a great tool to prevent issues even before they arise.
Higher Employee Satisfaction and Retention:
When the employees realize and see that their performance is measures with utmost fairness and accuracy solely based on the data, they tend to trust the process. This trust drives satisfaction and employee happiness. The data-driven decisions help businesses design and execute employee development-focused training and development programs which further increase employee loyalty and help increasing employee retention. The data-driven decisions eliminate bias and favoritism form review processes.
HR Empowerment:
The performance data help HR to make informed and accurate decision related to staffing, resource allocation, employee transfers, hiring/firing, promotions, etc. Data-driven decisions help HR to allocate resources where they are needed the most and help them enhance the outcome of the entire workforce. The performance data also help HR to adopt to the changing needs and enable them to ensure the required talent and skillsets are always available.

Although the data-driven performance management is proven to be the most effective approach however, it comes with some challenges. First and foremost challenge is to develop the data collection mechanisms and then the biggest challenge it to manage and analyze the large volume of data. It sometimes get difficult to determine which data is relevant or not. Therefore most of the modern performance management systems come with AI integrated solutions.

The AI (artificial intelligence) has advanced capabilities to process large volume to structured and unstructured data coming from multiple sources and channels. This enable AI-integrated performance management systems to provide advanced analytical tools with automated reports and actionable insights. The AI-powered data collection and analytical tools can efficiently identify even the minutest patterns and can unlock hidden insights which help empowering the HR and management.

AI Powered Performance Management System

Conclusion

As the technology is evolving, the customer behavior, market conditions, and the businesses themselves are rapidly evolving. We are entering into a new era of technology where our reliance on technology is increasing day by day. The modern performance management systems are one of the modernized application of a very old performance management practice. The performance management is a continuous process as every business and organization wants to leverage the full potential of their resources to ensure highest possible efficiency, and productivity. Businesses operating in Dubai, Abu Dhabi, Sharjah and broader UAE are well aware of the toughest market completion, increasing customer demands and rapidly advancing technologies.

Therefore adopting to latest solutions, methodologies and practices is very common. Over past two decades the performance management has emerged as one of the most essential business function. Since then the technology integration in performance management practices and strategies is continuously rising. The similar impact has been witnessed at the decision making practices. Now a days’ businesses tend to be more successful if they prioritize data-driven decisions over conventional decision and strategy making approaches.

In this blog we have discussed the role of data-driven decisions in performance management and their impact on overall organizational performance and success. We have also discussed briefly about modern performance management systems and data-driven decision making process. If you want to learn more about the subject or if you want our help to develop a bespoke performance management system for your organization, 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.

July 19, 2022

Employee Performance Appraisal System for Small Businesses

Here in Dubai and in fact all around the UAE the small businesses often think that the employee performance appraisal systems and enterprise performance management tools are only for large businesses and big corporations, however, that is not true at all. In fact a proactive performance management strategy can significantly boost the growth of the SMEs (small and medium size enterprises). Effective performance appraisal and employee management is essential for any businesses whether small or large. The performance appraisal systems help businesses aligning their resources, employees and processes with their long term goals and strategic objectives. The employee performance appraisal system is a great tool to improve communication, employee retention and employee satisfaction. The performance appraisal systems are a great tool to boost productivity and they also serve as an early warning system and alert them to take actions and make course correction to continue the progress in the right direction.

For small businesses usually the business functions are small, sometimes a single employee is performing multiple tasks, and so on. The impact of individual employee performance is relatively larger in case of small businesses. That is why the employee performance appraisal systems is even more important for small businesses. However, most of the local and small businesses doesn’t have an employee performance appraisal system. This means all such businesses are not operating at the full operational efficiency. An employee performance appraisal system allow small businesses to set up a top down mechanism to achieve strategic objectives. The employee performance appraisal system is a framework that enable organizations to successfully implement strategies to communicate and achieve top level objectives to effectively improving daily activities of their frontline employees. For small businesses the biggest challenge is the resources and funds. Here is how a good employee performance appraisal system can improve their return over investments, reduce their expenses and increase their profitability by allowing them to intelligently manage their resources and ensure maximum outcome.

What is Employee Performance Appraisal System?

The employee performance appraisal system is a systematic approach to evaluate the ability of an employee to complete the required tasks. The employees are evaluated across different performance dimensions such as the quantity of their work, the quality of their work, the value added to the business’s goal, the financial aspects of sustaining the employees and the true cost of their service to ensure the employees are delivering what they are hired to deliver and the business is getting what it is paying for. However, all these efforts are useless until the employee is properly communicated the high-level organizational goal and objectives, and what they should do and how they should do to achieve the required performance that can contributes positively to achieving the high-level organizational goals buy achieving the individual performance goals. Doing this manually is not a simple tasks that is why the employee performance appraisal system is used by businesses to improve the performance.

What are Different Types of Employee Performance Appraisal Systems?

Earlier the businesses and organizations were following the traditional employee performance appraisal system. However, things have drastically changed in the past two decades, especially the last 10 to 15 years lead to a rapid transformation of traditional business practices and industry standards. The traditional employee performance appraisal systems were mainly manual and require a lot of resources too. Furthermore there are several loopholes and other factors which can reduce the accuracy of the results. Therefore businesses started to digitalize their performance management systems. The digitalization, automation and innovation resulted in a significant change in the results and help businesses to boost their productivity, efficiency, and profitability. Here are the types of employee performance appraisal systems:

General Appraisal

The general appraisal is a continuous communication process between the employees and the managers. The final evaluation is done at the end of the year, where manager and the employee hold a meeting to discuss and determine if the goal and objectives are met for the last year. On the bases of this meeting the manager prepare a feedback and then new goals and objectives are set for the next year.

360 Degree Appraisal

The 360 Degree Appraisal is a more in-depth analysis it includes feedback from supervisor, line manager, peers, customers, cross function management, direct reports, feedback from relevant stakeholders (both internal and external) and comprehensive review of behavioral competencies. The feedback data is collected throughout the year and then it is reviewed by the manager at the time of appraisal period.

Project Based Evaluation

The project based evaluation is one of the modern form of employee performance appraisal system. It boost employee engagement and keep them motivated. The evaluation is done on the bases of employee performance and contribution to a particular project. The manager or project manager gives the feedback on the bases of employee performance during the project execution process.

Employee Self-Assessment

Employee self-assessment is a good performance appraisal process it keeps employee motivated. The employee evaluate their performance by themselves and then the evaluation report is compared with the evaluation done by the manager. The manager held a meeting with the employee and discuss the differences and try to understand employee’s prospective which help motivating them more.

Manager Performance Appraisal

The manager performance appraisal are very crucial for any business. It is the managers who are responsible of keeping the employee motivated while ensuring customer satisfaction. The manager performance appraisal is usually done by feedback from the clients, teams, and even individual employees, some are kept anonymous to prevent repercussions in future.

Sales Performance Appraisal

The goals and objectives of a salesman and sales team have huge impact on the high-level financial goals and objectives of the business. Hence their performance evaluation is very important. The sales performance appraisals is the result produced by a salesman or sales team comparing to the pre-set goals and objectives (SMART Objectives) for a certain period of the time.

Technological Performance Appraisal

The technological performance appraisal is also a modern form of performance management. The individual employees are evaluated for their technical proficiency and understanding. These days the since most of the regular business functions and operations are heavily digitalized and the technology keeps evolving, so technical know-how has been given high importance along with other competencies.

These are the most common employee performance appraisal methods. A small business or medium size enterprise can implement several methods to monitor and boost its performance. For large corporations and big businesses the impact of individual performance is not so strong. However, small businesses might only have one or two salesman, maybe only one accountant and one or two administrative staff along with junior level workforce and staff. So, for such businesses poor performance from the accountant could put the entire business in murky waters. Hence the employee performance appraisal system and active performance management is extremely crucial for long term success and profitability.

What is Employee Performance Appraisal Cycle?

The employee performance appraisal cycle or performance management cycle is based on four stages. These stages start with setting up goals and objectives, developing strategies and making plans and then closely monitor the performance and progress through the execution of those plans and at the end employee development and rewarding process. Here are the four stages of employee performance appraisal cycle or performance management cycle:

Planning
Monitoring
Reviewing
Rating & Rewards

The planning is the very first step any small business will have to take. The manager, owner or stakeholders determine the high-level business goals. On the bases of these goals the managers set goals for individuals, different teams and business functions. For employee goals and objectives the managers should apply the SMART Framework, where the S stands for Smart, M for measureable, A for achievable, R for relevance and results, and T stands for time-bound.

The continuous and pro-active monitoring is a key to success. Traditionally managers and supervisors don’t follow up much frequently, however, that makes the entire employee performance appraisal process ineffective and businesses couldn’t get desired results. That is why continuous monitoring and more frequent (monthly) follow ups are important, especially for small businesses and medium sized enterprises. The reviewing is also a very important stage in employee performance appraisal cycle. The review provide comprehensive data on employee performance and what factors are impacting their performance in positive and negative sides of the pre-set requirement. It also highlight the areas of improvements. The final step is rating and reward process.

The small businesses or even any size or kind of businesses must have a fair rating and reward process. The employee who underachieve should be warned, or trained or even terminated if necessary and the achiever or over-achiever should be awarded fairly. This increase the morals of the employees and overall workforce and encourage them to perform better in the next employee performance appraisal cycle.

What is Employee Performance Appraisal Software?

An employee performance appraisal software is a technological solution to streamline the performance management processfor businesses. The small businesses and medium size enterprises always have limited resources. The employee performance appraisal software is very easy to operate and it automates maximum performance management tasks. It provides a centralized dashboard and enable the management to continuously observe the performance. It automatically collects employee performance data and offer various modernized features which not only make performance management easier but more effective. The performance management software can help businesses implementing various employee appraisal methods and provide in-built data analytical tools which make analysis easier and improve the accuracy of the process. It increase employee engagement, save time and efforts, and improve communication between the employees and the management which are crucial for achieving better performance.

Why Small Businesses Need an Employee Performance Appraisal System?

The employee performance appraisal system can be game changer for small businesses and medium sized enterprises. For every small businesses the biggest goal is to grow and scale over the time. For a long term growth a business needs a long term strategy and plan to maintain a certain level of performance, productivity and profitability. It is a very common belief that in order to raise the quality and quantity of the work a businesses must have to increase resources which means more expense. For a small business investing too much of its hard-earned cash into expanding team and operation is not always an option. However, a good employee performance appraisal system or performance management system can significantly boost the capabilities of the workforce which means more high quality work can be done without raising your investments or expense. Here are some key benefits of utilizing an employee performance appraisal system to streamline the growth of a small business.

Employee Performance Appraisal System: Boosts Morale

Let us admit, everyone likes being praised at work. If my boss highlight some of my achievement in an internal meeting, I will feel proud. This will raise my morale and it will make me more passionate about my work and performance. An employee performance appraisal system provides a framework to document and formalize admirations and praises. This not only impact on the individual employee who is being praised, but it also inspires others to perform well. Everyone like being recognized for their efforts. The fair recognition not only help boosting the morale of the employee but it also impact on the entire team, if people knows that whoever will genuinely perform well will be praised and recognized, they do well. When someone is awarded with adequate credit to their efforts they feel happy and satisfied. It improve employee retention and happy employees tend to perform well.

Employee Performance Appraisal System: Increase Employee Retention

Employee retention is crucial for a small business. Hiring a new employee, letting them integrate in the team and investing precious resources on them and then losing them could cost a lot to a small business. It also impact on the other team members and it impacts on the overall organizational culture of the business. Higher employee turnover could cost a lot of resources, time and lose of work also. That is why the employee retention is much more important for the small businesses. The employee satisfaction and happiness is a key to employee retention. Several independent studies and market experts suggests that employee can perform well and be loyal to the employer even if they believe they are earning less, if and only if they are happy and satisfied.

The employee performance appraisal system increase communication between the employees and the managers, it provide a framework for recognition and appreciation which help managers to resolve any problem their employees might be facing. When the employees are being heard, their problems and complaints are taken seriously they become more loyal and satisfied.

Employee Performance Appraisal System:Highlights Training Needs & Sets Career Path

The employee performance appraisal system provide in-depth insight of employee’s skillset. Regular and more frequent reviews and discussions enable managers to understand the capabilities of the employees and also highlight their flaws. Fluid communication and providing a forum to employee to better express themselves which helps managers understanding the employee and it also enable them to identify any needs for the training before even it start impacting the productivity and performance. In the modern world the technological advancements and changes in the market trends are more often which means the business must have to keep improving its workforce all the time. The frequent discussion whether formal or informal among the employees and the managers can help identifying any shortcoming and future requirements.

Furthermore it clarifies the career paths for the employees and make them more passionate about their work. Which boost their morale and provide them a sense of purpose and a goal within the organization which also reduce employee turnover. When the managers are well aware of the technical and behavioral competencies of their employees, they can chose right candidate for the promotion which helps improving the performance and productivity and also boost morale of the employees.

Employee Performance Appraisal System:Higher Employee Autonomy

The biggest advantage of an employee performance appraisal system is that is simplify the communication between the employee and the manager, this enables businesses to clearly communicate the high-level organization goals to the employee. Which help setting up clear individual goals and objectives and set clear expectations from the employees while providing them complete understanding of their contribution in the high-level business goals. Hence the employee and the mangers can make better plans which increase achievements of strategic objectives and result in a better overall performance. This also boost employee’s morale by proving them more freedom in making their own decisions which results in more commitment, productivity, loyalty and satisfaction. More frequent reviews and communication ensures employee satisfaction and provide managers a chance to quickly solve problems, resolve disputes and remove obstacles from the business processes. Freedom, trust, and loyalty drives innovation and fosters a culture of growth and productivity.

Employee Performance Appraisal System: Rewards, Recognition and Accountability

The employee performance appraisal system sets clear path for reward and recognition programs. It ensures fair process and reduce employee complains, in fact it help gaining their trust. For any organization whether a small business or large enterprise a healthy and productive environment is a key to growth and success. When the employees are passionate, satisfied and committed to their objectives the business can achieve the high-level goals and objectives. Where the rewards and recognitions are important the accountability is also crucial. Awards and recognition is for achievers and over-achievers however the accountability is for the under-achievers. Usually here in Dubai and all around the UAE the employees think that the accountability promotes a culture of blaming, however, that is not true at all. In reality a fair and effective accountability is absolutely necessary to explain the business goals, objectives, mission and vision to the employees and it clearly communicates the role of individual employee and the expectation from them in order to meet those goals and objectives. Which inspire passion, commitment and personal growth amongst the employees and boost their performance.

Employee Performance Appraisal System: Raise Profitability and Boost Growth

Every small business in Dubai or anywhere in the UAE or even in the world would want to raise their profitability and boost their growth. That is the most natural goal of any small or large business. However, for smaller businesses the journey is slightly different. Each businesses have its own niche, category or industry, however, everyone wants to grow. An employee performance appraisal system can play a crucial role in ensuring long term growth. The growth lies in customer satisfaction and quality of work a business delivers to the market. These both factors fully rely on the employee performance unless you owns a fully automatic machine which take raw material in and produce 100% perfect product from the other end, which is a nice fictional story but in reality that is not possible. As a business can’t survive without satisfied customers similarly a business can’t operate without a proper workforce. The employee satisfaction and happiness is equally important, it ensures good quality work and great services for the customers which makes them happy and satisfied.

Improving employee performance, keep them motivated and passionate about their work and gradually improving their skillset and capabilities is what drives success. An employee performance appraisal system is all about it. It help businesses communicate with its employees, it provide an intuitive framework of feedbacks and it help businesses identify the areas of improvements. The employee performance appraisal system doesn’t only help improving employee efficiency, performance and competencies but it also help improving the managers and eve higher staff as well. The employee performance appraisal system help businesses optimize efficiency and performance at every single bit of their organization. Which optimize cost and expense, enable employees to deliver more, improve quality and ensures happy and satisfied customers. Collectively it help businesses generate more sales, profits and grow on a continuous pace.

Conclusion

The purpose of this blog was to provide our customers and audience a basic understanding of employee performance appraisal system. I tried to highlight its importance for the small businesses. All small businesses and medium sized enterprises in Dubai or anywhere in UAE can leverage the employee performance management system to boost their growth and profits. The main objective of deploying a performance management software is to boost employee performance, increase their satisfaction and loyalty and to maximize their output. Quality work and efficient workforce results in happy and satisfied customers. Which are a key to long term success. Small businesses need higher customer retention in order to grow. Studies have revealed that acquiring a new customer could be 5 to 25 times more expensive from selling to an existing customer. Poor quality products and sloppy services repel your customers and make it even more expensive to build a good brand reputation that attracts customers.

That is why for small businesses and medium sized enterprises an efficient and effective employee performance appraisal system is absolutely crucial to achieve long term goals and to sustain growth. RSI Concepts is a leading custom software development company in Dubai, UAE. If you want to learn more about the subject or if you want us to build a custom, cost-efficient and very effective employee performance appraisal system or performance management system for your business. 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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June 21, 2022

Beginners’ Guide to Appraisal System

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 3^rd 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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Tag: employee performance appraisal system

Data-Driven Decision Making in Performance Management

What is a Performance Management System?

What is the Role of Data-Driven Decisions in the Modern Performance Management?

Key Advantages of Data-Driven Decision Making in Performance Management

Objective Performance Evaluation:

Personalized Employee Development Programs:

Elevated Efficiency and Productivity:

Better Employee Engagements:

Higher Alignment with Organizational Goals:

Proactive Performance Management:

Higher Employee Satisfaction and Retention:

HR Empowerment:

Conclusion

Employee Performance Appraisal System for Small Businesses

What is Employee Performance Appraisal System?

What are Different Types of Employee Performance Appraisal Systems?

General Appraisal

360 Degree Appraisal

Project Based Evaluation

Employee Self-Assessment

Manager Performance Appraisal

Sales Performance Appraisal

Technological Performance Appraisal

What is Employee Performance Appraisal Cycle?

What is Employee Performance Appraisal Software?

Why Small Businesses Need an Employee Performance Appraisal System?

Employee Performance Appraisal System: Boosts Morale

Employee Performance Appraisal System: Increase Employee Retention

Employee Performance Appraisal System:Highlights Training Needs & Sets Career Path

Employee Performance Appraisal System:Higher Employee Autonomy

Employee Performance Appraisal System: Rewards, Recognition and Accountability

Employee Performance Appraisal System: Raise Profitability and Boost Growth

Conclusion

Beginners’ Guide to Appraisal System

What is Appraisal System?

Why a Business should use an Appraisal System?

Different Types of Appraisal System

1. 360 Degree Feedback

2. Management by Objectives (MBO) Appraisals

3. Behaviorally Anchored Rating Scale (BARS)

4. Human Resource Accounting or Cost Accounting Appraisals

5. Psychological Appraisals

Appraisal Systems You should Avoid

Conclusion