On paper, it is easy to see why rating-based performance reviews are popular. They are easy to do, quick, and fairly painless. Automated rating-based performance reviews further simplify the whole process.
Measuring employee’s performance is an inevitable part of assessing business health. Since employees are a business’ most valuable asset, it is imperative to ensure that individuals and teams achieve their full potential with adequate support and development opportunities. It is the key performance indicators (KPIs) that work as useful metrics to benchmark the progress. Put in the best KPIs in the business evaluation system to check employees’ effectiveness and level of productivity.
KPIs make everyone accountable for their performance. The KPI system helps employees measure their impact on business work, daily activities and how they affect the foundation of the role. Such a program contributes to the long-term success of the organization. KPI for performance evaluation would set the team and individual on the right track.
What do you understand about the Key Performance Indicator (KPI) and how to use it for reviews?
KPI is a way to quantify employee performance in an organization. The metrics are used to track employee productivity and to manage the team based on the requirements at work. It is critical to monitor and assess performance in a timely manner, but finding details about one’s duties proves to be a challenge.
This demands the use of the latest methods for developing KPIs for employees. Successful leaders should plan and adopt effective evaluation techniques for suitable results. Therefore, a lot of companies deploy KPI systems for performance reviews based on valuable insights. If you measure the value of employees with profit margins, it will give inaccurate and ambiguous results on productivity and performance.
Performance evaluation includes both qualitative and quantitative elements to get an appropriate outcome and includes more than just one’s past performance. However, one can get qualified data only by using KPIs to motivate a team. Once you find a person’s potency, you can assign tasks accordingly for the most effective results. The performance review will help in better understanding what motivates an employee and identifying weak points.
Using performance evaluation, pricing policy, project management, team management, and other elements allows identification of problems early on. However, KPIs help evaluate payroll operations when salaries of employees reflect the performance potential of an individual.
What metrics help measure employee performance?
KPIs alone cannot be used to evaluate an individual’s performance. Performance appraisals are based on both qualitative and quantitative feedback from managers, which is more than just productivity. An employee’s worth cannot be solely determined based on KPIs, and it extends beyond that.
Employee KPIs are high-level markers that show the level of employee productivity. It allows businesses to identify their potential and assign tasks to individuals or groups. This would help one focus on operational issues, having smooth workflow and resource availability.
1. Review the participation rate
Performance reviews are difficult to maintain regularly and take a lot of time. One of the primary benefits of deploying a people enabled platform is its flexibility and focus on user experience. Some of these are:
- Edit reviews for sick or absent employees
- Users can access and complete it on their own using its web version or app
- It saves drafts, allowing one to pick where they left
With better user experience, you have to encourage clients to set goals for work completion. Analyze how organizations can benefit from this performance management program.
2. Efficiency of HR process
Switching from the traditional paper-based review method to the latest user-enabled platform saves time for HR to process and report results. Meanwhile, managers and employees can participate in the review and use the platform easily. As a result, long-term goals can be achieved and in a timely fashion.
3. Quantity of feedback exchanged
As managers share real-time feedback with their employees or teams, it helps clarify expectations, share advice and celebrate achievements. Not all employees manage to get feedback once a week, though real-time feedback can help them improve at a greater scale.
It is not just a manager feedback that boosts engagement. Managers can help teams develop new habits. Management should set a feedback goal for better results. If giving continuous feedback is new to your company, set a goal to share feedback with at least one member of the team and slowly improve it. With this, track how often you give feedback and how it affects individuals and motivates the entire team.
4. Quality of feedback
A performance management tool can facilitate the feedback experience. It helps management learn how to give feedback to achieve the most effective results. Measure the effectiveness of feedback, and include surveys on how employees found it valuable and helpful. Set a goal and work to improve the quality of feedback based on the positive response.
5. Check on employee net promoter score (NPS)
If you wish to enhance employee engagement, focus on measuring feedback and plan for quarterly surveys. Prepare a set of questions and invite both positive and negative responses. Use the survey data to make the company a better place to work and help employees perform better.
Choosing and tracking KPIs
Are you unsure whether the company has deployed the appropriate KPI? Being a team leader, it is a common instinct to find out how the team is performing. Here, a positive KPI is enough as an indicator to show that you are sailing in the right direction. To pick the right KPIs to track performance and goals, you need to make sure they are related to the performance metrics.
- Is the goal quantifiable?
The performance metrics should be easy to evaluate and quantify. If you tell someone, ‘to be more positive’, it can be difficult to quantify. Instead, try setting goals based on KPIs that can be easily measured and objectively.
- Is the goal aligned with business objectives?
One should be careful when deciding on KPIs, as they should align with business objectives. If an objective is to offer customer satisfaction, KPI should also measure how much time it takes to resolve a problem raised by a customer.
- Can employees get a realistic impact from KPI measured?
The level of realistic impact for measuring KPIs mostly depends on the way a service is offered at the employee’s end. The solution depends on several factors, including how a problem can be resolved by a single person or whether it requires several steps.
- Is KPI relevant to a person’s role?
Not every employee should have the same metrics to measure the KPI, as it differs from one employee to another. When deciding on KPI for a team, it should be aligned with the role of each employee of the team.
To build an efficient KPI system, change the way of tracking elements and improve them. Try to create quarterly reports to track employees’ progress towards goals. It helps understand whether performance is declining, improved, or stabilized. Employees experiencing stagnant performance should seek new challenges and contribute effectively to business growth.
How to set organizational KPIs to assess performance?
Organizations should carefully choose KPIs to measure activity in the critical business areas. A satisfactory KPI for performance review should be built on customer surveys using the right data. The satisfaction score will help you decide how much to contribute to achieve the benchmark. No matter what the nature of KPIs are, they should be measurable, achievable, specific, relevant and time bound so that they give correct results. Measure metrics that are aligned with a business’ strategy and vision and help it reach its goals.
Use KPIs for development and recognition
If you want meaningful KPIs for performance reviews, keep the team motivated with the help of incentives and training. It is important to measure employee recognition and rewards based on KPIs.
For instance, if your goal is to attract new customers, KPI should be set to measure how many new customers you gain in a week. Based on this, build a performance system to reward employees effectively.
If you are using formal performance measures for managing performance, it should be accompanied by tips on effective leadership and inspiration for a team. Thus, KPIs can be used to measure any area of performance and should align with the strategic direction of the company.
KPI and performance management
Besides performance, managers must set objectives and targets that can be achieved by each individual and team. But how to measure performance and understand how much effort one puts into achieving goals? This is where performance management can help and understand who is working harder and who is not. Does the work to achieve the level that the organization requires maintaining? Key performance indicators help measure these by quantifying the performance level of an individual and a team. Check the goals and based the evaluation on the KPIs to get effective answers on each and work on the weak organizational areas.
What are the elements included in the KPI process?
The key elements of employee measurement for business success are:
- Describe the intended outcome
- Understand the alternative options to be taken
- Select the right measure for objectives
- Define the complex indices as required for business functions
- Set targets and path to achieve them smoothly
- Define and list the effective performance measures
How to develop KPIs for employee performance reviews?
No matter which industry you work in, managers look for competency in the right places. This is when managers will look at whether employees can meet goals, effectively contribute their part in a team, and apply critical thinking to ensure successful business operations. Although there are many key indicators, critical business operations should be the primary focus.
Colleagues who are working in a team actively participate and brainstorm ideas for the group. Taking part in different team projects, sharing ideas among team members and deciding on approaches often contribute to the success of the project.
An employee should know appropriate, accurate and professional communication in business and one should communicate, keeping in mind:
- Have the habit of concise and clear verbal communication
- One should be responsive to managers and colleagues
- Do timely follow-up via mail or for customer enquiry
- Try to articulate concepts and feedback accurately
No matter what your role is, you directly or indirectly help customers and, in any critical situation, employers will reach out to you for answers. Here, one should ensure they can handle the problem and not delay it, give timely responses to the customer, and offer adequate solutions to customers as required.
Track performance metrics, set goals, reduce turnover, and try to improve performance. By establishing these, it helps the team clearly understand where they stand and what it will take to reach the goals. Having clearly defined business goals will help set KPIs for thorough employee performance reviews.
Want to know how Engagedly can help you manage your employees better? Request a live demo from our experts!
One of the most important aspects of effective employee performance reviews is to use objective and accurate performance review scales. A proper performance rating scale permits your managers to accurately and objectively express your employees’ competencies and determine the areas they need to improve. It’s vital to choose the best rating scale for performance reviews for your organization, and we’re going to help you do that!
What is a Performance Rating Scale?
Employers frequently use rating scales as a means of assessing employee performance or accomplishments. These scales are uncomplicated to implement, offer a thorough evaluation, and allow employers to discern which employees are thriving and which ones may need further assistance.
Rating Employee Performance
Organizations use performance rating scales to understand individual employee performances, which provides companies with the data needed to improve and grow. To effectively collect and analyze employee performance data, your organization needs to use clear and objective performance metrics to avoid biases or inaccuracies during performance reviews.
Objective employee rating scales are also beneficial for employees. Employees need to clearly see their performance levels and areas of improvement. In the absence of such improvement, they will lose out on raises and promotions. Furthermore, an objective performance rating scale enables transparent measurement of employee performance.
When it comes to employer benefits, an objective job performance rating scale shows how employees are performing and helps in determining rewards and recognition.
Important considerations when choosing an employee rating scale
Given the importance of performance management rating scales, your company needs to invest time and effort to produce the best rating scale for performance reviews to maximize results. To achieve that, you need to take the following considerations into account.
1. Type of data to choose for the right performance review ratings
There are different ways of measuring employee performance. The data type you choose impacts what scale would be optimal for you. There are essentially three types of data:
Also known as ‘categorical.’ This type includes data items that have no relationship with one another. In other words, the data items aren’t ordered or have an arithmetic relationship. An example of nominal data would include asking a qualitative question like, “How do you feel about your workplace?” The answers to this question would be non-numerical and impossible to order.
Binary questions give a choice between one of two options. Most commonly, binary questions will ask you to choose between yes and no. An example of a binary question in this context is, “Did you complete your monthly goals?” The answers to this question would be a yes or a no.
Ordinary data includes a rating scale with answers that can be ordered, but the difference between each item cannot be detected. For example, a question could ask an employee to rate workplace experience between poor, below average, satisfactory, above average, and good. The choices for this question can clearly be ordered, but the degree of difference between each answer cannot be quantified.
2. Validity of your questions and categories
The most important consideration for designing the best rating scale for performance reviews is the data’s spread and validity. Spread and validity are important since most conventional data scales tend to be weakest in that area.
We also know spread as variance, differentiation, and range. The term refers to the degree of difference among the data points. Ideally, your spread should be great enough to record as much nuance as possible. Most conventional performance analysis tools suffer in this category because they have a low spread. One example of a problem caused by a lack of spread would be if your managers rated all employees as high-performing. That’s because the scale being used doesn’t provide enough meaningful difference for managers to express nuance. The solution is to design performance management rating scales with diverse responses, like “Above average.”
Validity refers to the accuracy of the data recorded regarding the questions asked. As in, are your measuring tools measuring the data that your organization wants? For instance, if you measure caloric intake, does it affect relevant real-world metrics? You need to make sure your scales ask for data that are actually useful for your organization from an actionable perspective.
You need to train employees to properly understand and use the scales. They also need to be taught how to accurately interpret response options so that they select the apt ones. For that reason, transparency is the foundation of good employee performance measurement. Transparency also increases trust in your organization and builds its reputation for fairness, and encourages employees to be more accurate in their responses. One of the biggest mistakes that many companies make is that they openly claim to abolish the scale system, but secretly continue using it among executive and management teams.
4. Presentation of Data
There are two primary ways to represent rating scale results:
Numeric scales contain numbers and only express data arithmetically. Employees often dislike numeric scales due to the vagueness that surrounds them. For example, how would a manager meaningfully distinguish between awarding a rank of 4 vs. a 5 for an employee in a subjective metric like “leadership”? The difference between successive points can be difficult to narrow. Therefore, managers exercise high subjectivity, which reduces accuracy.
Descriptive scales provide qualitative information, usually as descriptions of what each scale item represents. Descriptive scales range in complexity, from different agreement levels to a specific set of actions the employees must take for each question. An example of a descriptive scale could include asking employees if they feel workplace culture is accepting of them and providing them with a scale that ranges from agree to disagree.
Types of Performance Rating Scales
Here are some existing performance rating scales you could use.
1. Likert Scales
The Likert scale is used for measuring responses to statements. The most common Likert scale has values ranging from ‘Strongly Disagree’ to ‘Strongly Agree’ with ‘Disagree,’ ‘Neutral,’ and ‘Agree’ in between. Likert scales are symmetrical and contain an equal number of positive and negative responses to provide balance.
The above-described scale is the most common, but there are other options. The number of scale options is even or odd. An odd number Likert scale will usually have the middle value representing neutrality. An even number Likert scale is considered a ‘forced choice’ scale since participants will be forced to choose a side.
2. Semantic Scales
Semantic scales present two extremes, with several unnamed choices in between. The idea behind the semantic scale is to provide the recipient with an intuitive range of expression. For instance, you could ask an employee whether they think a project was a success or failure with a scale ranging from success to failure, with 7 options in between to represent the degree of agreement.
3. Custom Scales
If existing scales prove ineffective for your needs, you could build custom ones. The advantages of custom scales are that HR teams can build them to solve their company’s specific problems. But, custom scales could lead to distortions in data if you’re not careful about how you construct them.
4. The four-point rating scale for performance reviews
The 3-point rating scale is the industry norm, but the 4-point scale has increased in popularity. The 4-point rating scale is the best option for you if you want more nuance than the 3-point scale provides. 3-point scales have been criticized in the past for being too restrictive. As explained previously, the greater the spread a scale has, the more insightful information it’s able to provide. So, a 4 point scale is a better choice than a 3-point one.
Here’s an example for 4-point scale:
“Does the employee meet expectations?”
Option 1: Needs Development
Option 2: Occasionally Meets Expectations
Option 3: Consistently Meets Expectations
Option 4: Exceeds Expectations
We’ve increased the question’s spread by introducing the additional “Occasionally Meets Expectations” option from an original 3-point scale that lacked it. 4-point scales are useful for simple questions that don’t have too much nuance, but they’re unsuitable for complex questions. Depending on the complexity of your employee performance review, using a 4-point scale may or may not be advisable.
The best advantage of the 4-point scale is that it avoids centrality bias. Centrality bias is when your managers award average scores to all employees, leaving your overall performance review showing most employees as average. By introducing a 4-point scale, managers can no longer award average scores to most employees.
5. UC Berkeley Scale
The UC Berkeley Scale was developed by the University of California, Berkeley. The scale has a 5-level system with ratings that range from ‘Unsatisfactory’ to ‘Exceptional.’ Supervisors assign values to employees based on their overall performance. It’s expected that managers will assign the Exceptional ranking rarely to employees to ensure that it’s done properly.
6. Harvard Scale
Harvard University developed multiple rating scales for different metrics. The following 4 are the most important scales:
1. Overall Performance
The overall performance rating scale has the 5 following points:
- Not Meeting Expectations
The Goals scale uses a 3-point rating that measures whether a goal was successfully completed.
- Goal was met
- Goal was partially met
- Goal was unfinished
The Competences scale has 4 points, and it determines whether employees possess thorough or inadequate knowledge of the organization’s major competencies. The scale has the following points:
- Does not demonstrate knowledge
4. Direct Report Rating
Managers only use the direct report rating scale to determine the effectiveness of employees’ abilities. It has the following points.
- Highly Effective
- Requires Improvement
In conclusion, your organization could adopt many job performance rating scales. But, given the importance of effective and objective performance measurement for your organization, it’d be best to find the best scale for you. The best rating scale for performance reviews for your organization depends on your specific needs and what your organization wants to achieve.
Performance reviews. Two words that don’t leave a pleasant taste in many employee’s mouths. And most managers share the same opinion.
Performance reviews might seem like just another task for managers, but they are a huge deal for the employees too. Whether you love them or hate them, performance reviews are here to stay!
Performance reviews. Two words which don’t leave a pleasant taste in many an employee’s mouth. And most managers share the same opinion. Yet employee performance reviews form an integral part of HR processes in companies the world over.