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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